UPDATE 3-Less vocal Swiss central bank still set for loose policy

* Keeps policy rate at -0.75% as expected

* SNB raises inflation outlook amid higher oil prices

* Says will intervene on forex markets “as necessary” (Adds comments from SNB chairman)

ZURICH, March 25 (Reuters) - The Swiss National Bank toned down its verbal commitment to foreign currency interventions and raised its inflation outlook on Thursday, but chairman Thomas Jordan said this did not mean the bank would quit its ultra-expansive policy.

The central bank kept its benchmark interest rate locked at minus 0.75% as forecast by all economists in a Reuters poll, reiterating its commitment to a policy in place since 2015, spearheaded by the world’s deepest negative rate.

This was despite the franc losing 3% of its value versus the euro this year as safe-haven inflows eased.

The SNB said it remained committed to currency interventions, albeit using less forceful language than in December, when it said it was willing to intervene “more strongly” in the forex markets. On Thursday it said only that it would intervene “as necessary”.

Jordan said that he welcomed the depreciation of the franc, which remained “highly valued” but that the change in the bank’s choice of wording was “no signaling at all for a change of monetary policy for the time being”.

“There is absolutely no change in our monetary policy, so our willingness to intervene in foreign exchange market if necessary is exactly the same,” he told reporters.


The tweak in language reflected the euro-Swiss franc exchange rate’s decline to a level where the SNB was not willing to intervene, said UBS economist Alessandro Bee.

SNB interventions appear to have been muted this year after hitting 110 billion Swiss francs ($117.5 billion) in 2020, the most since 2012 and drawing U.S. criticism that Switzerland was a currency manipulator.

The increased spending inflated the SNB’s balance sheet to close to 1 trillion francs, much larger than the size of the entire Swiss economy.

The central bank increased its inflation outlook, primarily due to a rise in oil prices and the weaker franc.

Still, inflation was forecast to remain low, Jordan said, necessitating ultra-low interest rates to support the SNB’s goal of achieving price stability.

“For the time being, we see no point where we can change monetary policy but to stay expansionary and to support the economy and bring inflation back into positive territory,” he said.

Inflation would need to rise much higher than forecast and the economic environment have to change considerably before the SNB could consider changing course, he said.

The SNB is likely to retain its rates for the foreseeable future, analysts said. “As long as the SNB sees an increase of the inflation rate as temporary, an increase of the target rates is far away,” said St Galler Kantonalbank economist Thomas Stucki.

“The SNB will wait for the ECB, and the ECB will wait for the Fed.” ($1 = 0.9360 Swiss francs) (Reporting by John Revill; Editing by Michael Shields, Gareth Jones and Hugh Lawson)