ZURICH, Dec 10 - Swiss money market rates traded virtually unchanged on Wednesday, with all eyes on Friday's Swiss National Bank meeting for its assessment of prospects for an economic recovery and the threat of inflation. Overnight and tomorrow/next rates were trading between 0.05/0.20 percent, unchanged from Tuesday. The Swiss central bank is not expected to change its benchmark interest rate target from record lows at its quarterly review. But economists are expecting an upbeat assessment of the international economic trend to feed into a nascent recovery in the export-dependent nation. Economists say a rate rise in Switzerland is likely to come before central bank colleagues in the United States and Europe act, possibly at the next SNB quarterly policy review in March. Interest rate futures contracts priced in three-month interest rates of around 0.28 percent by the end of December, 0.45 percent by end-March and 0.74 percent by mid-2004 <0#FES:>.
The SNB held its repo rate at 0.11 percent, offering over-night, one-week as well as "non-standard" December 11 to 18 money market liquidity. The central bank has maintained this level since April 2. Its policy benchmark -- the three-month Swiss franc London Interbank Offered Rate (LIBOR) -- was fixed at 0.26000 on Tuesday, just above the central bank's effective target of 0.25 percent. The Swiss franc softened slighty from seven-year highs while market players eyed Switzerland's cabinet elections for signs of any shift in the nation's famed political stability. The dollar last changed hands at 1.2705/08 francs, hovering above a seven-year low of 1.2585 francs from Tuesday's session and up from 1.2660/65 late on Tuesday in Europe. The euro was trading at 1.5473/78 francs compared with 1.5478/85 late on Tuesday.||www..com