Swiss Franc Gains As SNB Keeps Rates Unchanged, Raises Inflation Expectations

The Swiss National Bank left their three month Libor rate unchanged at 0.25% at its quarterly monetary policy meeting stating that prevailing uncertainty over future growth warranted a “cautious” stance.  Policy makers reaffirmed their commitment to keep rates at the lower end of their target band as signs of a global recovery have yet to be confirmed. However, they see no need for further government credit support measures as the Franc’s stability shows that policy measures have been effective. The central bank also maintained their commitment to counter Franc appreciation which has helped put a floor under its crosses. Yet, the committee revised their inflation expectations for next year to 0.6% from 0.4% and to 0.9% from 0.3% in 2011, which may lesson fears of future physical intervention. The Swiss Franc initial falters as on the commitment to battle franc appreciation, but would give back those gains on the higher inflation forecasts.