Mubasher: Switzerland’s central bank on Thursday left its expansive monetary policy unchanged, lowering its inflation forecast for next year, citing strong Swiss franc (CHF) and downside risks to the economy.

The Swiss National Bank (SNB) kept its interest on sight deposits unchanged at - 0.75%.

The SNB also kept its target range for the three-month London Interbank Offered Rate (LIBOR) at -1.25% to -0.25%.

The rate has been maintained at this level since January 2015, when the move in the sight deposit rate was a 50 basis point (bps) reduction.

Despite a slight depreciation since the policy meeting in September, the Swiss franc remained “highly valued, and the situation on the foreign exchange market continues to be fragile,” the SNB said in a statement.

Thus, the negative interest rate and the willingness to intervene in the foreign exchange market remain essential, the central bank added, hoping that these measures would keep the attractiveness of franc investments lower to reduce the upward pressure on the currency.

The central bank also trimmed its inflation projection for the next year to 0.5% from 0.8%, lowering its forecast for 2020 to 1% from 1.2%, while keeping its outlook for this year at 0.9%.

The SNB pointed to the slump in oil prices and moderate growth prospects, expecting a resilient growth for the global economy in the short term and a gradual downturn in the medium range.

Moreover, the bank highlighted major risks to the outlook due to political uncertainties and rising protectionism.

The gross domestic product (GDP) is set to come in around 2.5% for this year, and about 1.5% for next year.

By 12:19 pm GMT, the USD/CHF declined 0.19% to CHF 0.9919.