Investing.com - The euro slid against the Swiss franc on Thursday, closing in on 26-month lows after the Swiss National Bank left rates unchanged and reiterated that it will defend the 1.20 per euro exchange rate cap.
EUR/CHF slid 0.11% to 1.2014 from around 1.2038 ahead of the announcement. The pair fell to lows of 1.2007 on November 19, the weakest level since September 2012.
The SNB left rates unchanged at zero to 0.25% and warned that deflation risks have risen. It noted that appreciably lower oil prices will push inflation into negative territory during the next four quarters.
The bank said it now expects inflation to be flat this year and to grow just 0.1% in 2015, down from a previous forecast of 0.2%.
The bank also reiterated its pledge to defend the exchange rate floor against the euro with the “utmost determination”. It is prepared to buy foreign currency in “unlimited quantities” for this purpose.
Ahead of the meeting there had been speculation that the SNB could prepare a move towards negative interest rates as the prospect of full blown quantitative easing by the European Central Bank has pressured the euro lower.
Elsewhere, the Swissy was steady against the dollar, with USD/CHF at 0.9666.