The Swiss National Bank cut its outlook for Swiss inflation on Thursday as the central bank remained committed to its ultra-loose monetary path to guard against fallout from the "highly valued" Swiss franc.
The SNB said it now expected a 2019 inflation rate of 0.3 percent and a 0.6 percent in 2020. In its first forecast for 2021, it expects Swiss inflation to run at 1.2 percent.
The SNB said it still expected the Swiss economy to grow by 1.5 percent this year, saying there had been "moderate positive momentum" after a stagnation at the end of 2018.
The forecast came despite the Swiss government this month cutting its forecast for 2019 economic growth to 1.1 percent, citing a weaker world economy that will weigh on exports and investment.
The SNB said it remained committed to expansive monetary policy, citing the "fragile" exchange rate situation and the "highly valued" Swiss franc as reasons to maintain the expansive stance it has deployed over the past four years.
It kept its target range for the three-month London Interbank Offered Rate (LIBOR) at -1.25 to -0.25 percent, as unanimously forecast by 32 economists polled by Reuters.
The bank also kept fixed the negative interest rate of 0.75 percent it charges on sight deposits and said it remained ready to intervene in the currency markets if necessary to restrain the safe-haven Swiss franc, which has gained roughly 3 percent in value against the euro in the last 12 months.
"Since the monetary policy assessment of December 2018, the Swiss franc has depreciated slightly on a trade-weighted basis," the SNB said in a statement.
"Overall, however, it is still highly valued, and the situation on the foreign exchange market continues to be fragile."