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“The Swiss franc nevertheless remains highly valued, and the situation on the foreign exchange market is still fragile,” the SNB said in a statement after its quarterly policy review.

The safe-haven franc has lost some of its allure in recent weeks as Europe’s economic recovery has gathered momentum and political risks have dissipated.

The euro has gained nearly 5 percent since the start of July to approach 1.15 francs, helping Swiss exporters whose biggest foreign market is the neighbouring euro zone.

That is still below the 1.20 level the SNB defended for three years until January 2015.

The SNB kept its negative interest rates on hold and said it remained ready to intervene in the currency markets where necessary, the two bulwarks of its expansive policy over the past two and a half years.

It kept its target range for the three-month London Interbank Offered Rate (LIBOR) at -1.25 to -0.25 percent, as expected in a Reuters poll of analysts.

It also kept its policy of charging 0.75 percent on sight deposits held by commercial banks above a certain threshold.

The SNB said it needed to keep policy on hold in line with its target of maintaining price stability and supporting the Swiss economy.

The SNB cut its 2017 Swiss GDP growth forecast to just under 1 percent from the roughly 1.5 percent it forecast in June. The downward revision was broadly expected after tepid growth in the second quarter.

The central bank lifted its inflation forecast, saying it expected price rises of 0.4 percent in 2017 compared with its previous view of a 0.3 percent rise.

It saw an inflation rate of 0.4 percent in 2018 and 1.1 percent in 2019, up from previous forecasts of 0.3 percent and 1 percent.