By Neil MacLucas
ZURICH--The Swiss National Bank repeated Thursday that it will
intervene in the foreign exchange market to prevent the Swiss franc
from surpassing 1.20 against the euro, saying the limit remains the
"key instrument" to curb upward pressure on the currency.
Switzerland's central bank imposed the minimum exchange rate
three years ago. It also kept its target range for the three-month
London interbank offered rate, or Libor, a key interest rate, at
0.0% to 0.25% for the 13th successive quarter.
"The SNB will continue to enforce the minimum exchange rate with
the utmost determination," the Zurich-based SNB said in a statement
following its regular quarterly policy review, adding that the
currency was still highly valued. "It is prepared to purchase
foreign currency in unlimited quantities, and if necessary, it will
take further measures immediately."
The central bank has monitored exchange-rate moves over fears
that a strong franc could threaten the competitiveness of Swiss
exporters in the European Union, their biggest market. The SNB
introduced the floor shortly after the Alpine country's currency
neared parity with the euro in the summer of 2011.
The SNB kept its 2014 outlook for Swiss inflation unchanged at
0.1%. However it lowered its projection for 2015 inflation to 0.2%
from the 0.3% forecast in June. In 2016, the bank said it expected
inflation of 0.5%.
Thus "for Switzerland, the risk of deflation has increased
again," the bank said in a statement.
The bank trimmed its forecast for gross domestic product growth
this year to "just below 1.5% from the 2% projected in June. The
SNB said the economic outlook has "deteriorated considerably" since
its previous assessment in June.
Write to Neil MacLucas at neil.maclucas@wsj.com