Switzerland's central bank has kept its expansive monetary policy intact, holding its deposit rate at -0.75%, stating the Brexit vote has clouded its view of the global economy.
"The negative interest rate and the SNB's willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing upward pressure on the currency."
Reiterating its longstanding warning that the franc is significantly overvalued, the Swiss National Bank left its negative interest rates unchanged at record lows, conserving ammunition ahead of a British vote on EU membership.
The SNB held its deposit rate at -0.75% as widely expected, and kept its target range for the three-month Libor unchanged at a range from -1.25% to -0.25%.
The Swiss will go to the polls this weekend to vote in a potentially historic referendum to provide everyone in the country with a no-strings-attached monthly payment of 2,500 francs regardless of whether they're employed or not.
Switzerland is not alone. The city of Utrecht in the Netherlands is conducting a pilot program, and trials of the idea are planned in Finland and the Canadian province of Ontario.
The Swiss National Bank incurred a record loss of 23B francs ($23B) last year after the central bank's costly decision to abandon its currency cap against the euro.
While the appreciation of the franc that followed the Jan. 15 decision resulted in a loss of 20B francs on its foreign-currency positions, the SNB still plans a payout and dividends to the federal government and cantons.
Switzerland's central bank is still digging itself out of a hole, but a Q3 profit helped reduce some of its record first-half loss.
Blighted by its foreign-currency holdings, the SNB reported a loss of 33.9B francs ($34B) for the first nine months of the year, following the removal of the franc's currency cap in January and subsequent intervention.
Results showed this has come at a considerable cost to the central bank, which previously warned shareholders it may not be able to maintain its regular payout policy.
It looks like the the Swiss National Bank is done with its surprises for the year. As widely expected, the central bank kept its benchmark interest rate on hold today at a record low of -0.75%.
In January, the SNB roiled markets by removing the upper limit on the Swiss franc, allowing it to massively appreciate.
"Overall, the Swiss franc is still significantly overvalued, despite a slight depreciation," the central bank said. "Negative interest rates and the SNB's willingness to intervene as required make investments less attractive...easing pressure on the franc."
The Swiss franc extended its upbeat momentum this morning, despite the Swiss National Bank maintaining its deposit rate at a record low of -0.75% and warning it's ready to take further action to reduce the impact of the overvalued franc.
Consumer prices are falling and the Swiss economy is on the verge of its first recession in six years after the SNB's shock decision to unpeg its currency from the euro in January.
Since then, the franc has risen 15%, undermining exports and pushing down import costs.
The Swiss National Bank had no option but to exit its minimum exchange rate policy as "the international environment had changed," said the head of the central bank, Thomas Jordan, citing the ECB’s new QE policy.
This would have put "enormous pressure on the franc" and forced the SNB to buy around 100B francs' ($108M) worth of foreign currency a month to defend the cap of 1.20 francs to the euro, he added.
The SNB unexpectedly scrapped its cap on the franc last month, sending the Swiss stock market plunging and pushing the franc to record highs.
"Economic growth will certainly be weaker than we forecast in December, and its possible we could have one or two quarters of negative quarterly growth," warned Jordan.
Heightening the risk of a slide toward deflation, Eurostat today reported the largest decline in consumer prices in the eurozone since July 2009.
Consumer prices were 0.6% lower than in January 2014, having fallen 0.2% on an annual basis in December.
The plunge in consumer prices is unlikely to have an immediate effect on the ECB's €60B/month QE package, although the longer prices stay in negative territory, the more pressure the central bank will have to extend the program.