The Swiss central bank said today it would continue to enforce its cap on the franc's exchange rate against the euro, pledging to buy "unlimited" foreign currency if necessary.
"The Swiss National Bank will continue to enforce the minimum exchange rate of 1.20 franc per euro with the utmost determination. It is prepared to buy foreign currency in unlimited quantities," said the bank in a statement echoing a previous policy update in September.
The central bank put a floor on the euro's value against the Swiss franc in order to shed the Swiss currency's haven status.
Amid the public debt turmoil engulfing the European Union, investors have massively bought into the franc, sending it to record highs against the euro and threatening the alpine state's export-led economy. The euro rallied slightly today after sharp recent falls.
The SNB said today that the target range for the interbank interest rate, or Libor, remained at between 0.0 to 0.25% and it continued to aim for a three-month Libor close to zero.
The bank forecast growth of between 1.5-2% in 2011 but expected a slowdown next year with growth of 0.5%. It expects inflation of -0.3% in 2012 and 0.4% in 2013. "In the foreseeable future, there is no risk of inflation in Switzerland," the bank said.
There had been speculation that the bank might impose negative interest rates on foreign bank deposits or raise the currency cap to 1.25 Swiss francs to limit damage to the economy, analysts said.
