Swiss National Bank holds rates steady, watches franc strength

The Swiss National Bank kept its policy rate on hold on Thursday in the face of uncertainty over the Iran war, and signalled readiness to intervene to curb a recent surge in the Swiss franc fuelled by a flight to safety amid the global turmoil.

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The SNB maintained its benchmark interest rate at O per cent, the lowest among major central banks, as expected by a wide majority of analysts polled by Reuters.

The decision came on a busy day for central banks, after the US Federal Reserve on Wednesday kept rates unchanged, highlighting unusually high uncertainty as policymakers take stock of the impact of the US and Israeli war with Iran.

"Given the conflict in the Middle East, the SNB's willingness to intervene in the foreign exchange market has increased," the central bank said in a statement.

"The SNB thereby counters a rapid and excessive appreciation of the Swiss franc, which would jeopardise price stability in Switzerland," it said.

The franc weakened briefly after the decision, but soon recovered to trade a touch higher against the euro and dollar, at 0.9082 francs and 0.793 francs, respectively.

"It wasn't a surprise the SNB didn't change its interest rate as it is waiting to get more evidence of the impact of the economic shock of the Middle East conflict before deciding what to do," said GianLuigi Mandruzzato, an economist at EFG Bank.

Sweden's central bank also held rates on Thursday and the European Central Bank and the Bank of England are expected to do the same later in the day.