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The Swiss National Bank stuck with ultra-low interest rates in response to lingering risks to the economy from the pandemic and keep its “highly valued” currency in check. 

After returning from sick leave, President Thomas Jordan’s team of officials reaffirmed their commitment to make foreign-exchange intervention when necessary. They kept both the and the policy rate at -0.75%, a decision widely expected among economists. 

The economy of Switzerland is in a good place, as it’s recovering quickly without seeing an increase in consumer prices like in other countries. While inflation has risen from its 2020 low, it’s still forecast to remain below 1% through 2023 on average. 

The situation is different for other central banks. The Norwegian policy makers may increase interest rates on Thursday. Federal Reserve Chair Jerome Powell stated Wednesday that the U.S. central banks could reduce asset purchases starting in November.

According to the SNB, there will be a 3% increase in GDP this year. This is compared with 3.5% that was expected in June. 

Despite a buoyant recovery and low unemployment, the central bank is reluctant to raise what’s currently the world’s lowest benchmark interest rate because that could boost the haven and drive down inflation. The SNB has invested hundreds of billions in interventions over the last decade. 

This loose policy resulted in a worsening property market imbalances. Lending got a boost when during the early days of the pandemic when Swiss officials deactivated a countercyclical capital buffer for banks’ mortgage assets to prevent a credit crunch. 

The SNB said Thursday that the “vulnerability of the mortgage and real estate markets has increased further.” According to some measures, housing is overvalued by as much as 30%, and a UBS Group AG indicator says real estate is close to a bubble. 

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