ZURICH: Switzerland's central bank is expected to maintain its monetary policy next week, despite the franc's recent strength and turbulence in currency markets as Britain's referendum on EU membership approaches.
All 36 economists polled by Reuters expect the Swiss National Bank to keep its benchmark interest rate unchanged when it holds a quarterly policy update on June 16.
The economists expect the central bank to leave its target range for three-month Swiss Libor at -1.25 to -0.25 percent, where it has held since January 2015.
A majority of economists also saw the SNB keeping rates unchanged until at least the third quarter of 2017.
They also forecast the SNB will keep the interest rate it charges on sight deposits unchanged at -0.75 percent.
The interest rate is a charge on the reserves commercial banks park with the SNB, and applies to funds beyond a certain threshold.
Both measures are designed to dampen demand for the Swiss franc, which has surged in value since the SNB scrapped its limit on the currency's value versus the euro 18 months ago.
The SNB has also said it is prepared to intervene in foreign exchange markets by selling francs and buying foreign currency to weaken the franc, whose strength makes life difficult for Switzerland's exporters.
"We expect no change in interest rates in the euro area or Switzerland in 2016," said Timo Klein, an economist at IHS Global Insight.
"In fact, since we only expect an increase in the ECB (European Central Bank) base rate in 2019, the SNB will also be hard pressed to raise interest rates before this date."
Analysts believe the SNB has been relatively happy with the level of the franc, which has traded at around 1.10 versus the euro for much of this year. Relatively positive forward-looking economic data for Switzerland has also lessened the need for major moves, analysts say, while Swiss unemployment declined in May.
Although the franc edged higher last week, the vote in Britain on whether to remain a European Union member, on June 23, is also likely to be a focus of the SNB's deliberations, according to economists.
A British vote to leave is likely to weaken the euro and the British pound and increase demand for US dollars and Swiss francs.
"The big elephant in the room is Brexit," said Karsten Junius, chief economist at Bank Sarasin in Zurich.
"The SNB will want have room to act if it Britain votes to leave and that leads to a strengthening of the franc."
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