ZURICH, June 21 (Reuters) - The International Monetary Fund backed the Swiss National Bank’s (SNB) expansive monetary policy, which aims to rein in the safe-haven Swiss franc, in an annual economic review released on Monday.
“Directors agreed that monetary policy should remain accommodative, with clear communication to help anchor inflation expectations, and mindful of potential risks to financial stability,” the IMF said on its website.
“They concurred that foreign exchange interventions should be limited to mitigating excessive appreciation and deflationary pressures, provided trend appreciation is allowed,” it added.
The SNB signalled last week that monetary policy would stay ultra-loose for the foreseeable future, saying projected higher inflation was no reason to change course.
The IMF gave the Swiss authorities good marks for their “strong, timely, and multi-pronged policy response” to the COVID-19 pandemic.
“Noting the still high uncertainty, Directors stressed the need to maintain supportive policies until the recovery is on a firm path. They underscored the importance of rebalancing the policy mix and fostering green, digital, and inclusive growth,” it said.
While welcoming the resilience of the Swiss banking sector, IMF officials underlined the need to monitor asset quality and risks closely, particularly those related to residential and commercial real estate.
The IMF projected the Swiss economy would grow a real 3.5% this year and 2.8% in 2022, while inflation would average 0.1% this year and 0.3% next year. (Reporting by Michael Shields, Editing by Timothy Heritage)