SNB Maintains 1.20 Trading Floor and 0% Libor Target
THE TAKEAWAY: SNB maintains a 1.200 EURCHF trading floor and a 0% Libor target -> The central bank lowered its forecast for inflation and GDP -> Franc trading lower
The Swiss National Bank kept its 3-month Libor target rate at 0.00%, thereby meeting expectations and leaving the rate unchanged since August of 2011. The bank also announced that it will continue to maintain the 1.200 floor in EURCHF trading with the utmost determination, and it still has expansionary monetary policy.
The central bank also lowered its prediction for economic expansion in 2012 to 1% from 1.5%. Additionally, the SNB lowered its inflation forecast from -0.5% to -0.6% in 2012 and from 0.3% to 0.2% in 2012. The bank commented that the downside risk to the Swiss economy will stay high, and the Swiss Franc will likely weaken.
The Swiss Franc declined slightly against the Euro following the SNB release. EURCHF rose above the key 1.2100, which was initially broken for the first time in six months at the end of last week, and has since provided resistance. The 1.2150 level has not been broken since the beginning of 2012, and therefore could continue to provide resistance.
EURCHF 15-minute: September 13, 2012
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