MNI REVIEW: SNB Leaves Rates Unchanged as Key Forecasts Cut

By Luke Heighton

     FRANKFURT (MNI) - The Swiss National Bank kept monetary policy unchanged

Thursday, citing weaker growth and inflation outlooks abroad.

     The SNB lowered its 2019 growth forecast from 0.5% to 0.3% in the previous

quarter, foreseeing inflation of only 0.6% in 2020, down from a previous 1.0%.

However inflation is predicted to reach 1.2% in 2021.

     Annual growth for 2018 was described as "robust" at 2.5%, while

unemployment fell to 2.4% in February.

     "After stagnating in the second half of 2018, GDP growth is thus likely to

pick up again somewhat. For 2019 as a whole, the SNB continues to expect GDP to

expand by around 1.5%," the bank added.

     The Swiss franc remains "highly valued" despite depreciating slightly since

December 2018, the bank said, "and the situation on the foreign exchange market

continues to be fragile."

     Overall, the SNB stated, "global economic activity has weakened more than

expected in recent months. Growth was curbed in part by temporary factors.

However, the underlying momentum in many advanced economies also slowed.

     "Economic and political uncertainty increased volatility and risk premia on

the financial markets at the end of 2018. In addition, growth and inflation in

some countries was again weaker than generally anticipated. Both led to lower

expectations regarding policy rates in the major currency areas."

     The SNB said it would continue to monitor imbalances in the mortgage and

real estate markets, with strong price rises in recent years and growing vacancy

rates increasing the risk of a correction.

--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: MT$$$$,MX$$$$]