Swiss National Bank Governing Board member Fritz Zurbruegg said the central bank is worried about the development of the country’s property market.
“We are concerned,” Zurbruegg said in a television interview with the SF state broadcaster, published on its website today. “We had the impression that the situation eased to a certain extent in the second quarter. Sadly this wasn’t repeated in the third quarter.”
The SNB’s decision to impose a ceiling on the franc in September 2011 as demand for the currency surged has made the Swiss property market more attractive for foreign investors seeking a haven for their money. The UBS Real Estate Bubble Index entered the “risk zone” for the first time since 1991 in the third quarter, partly fueled by record-low interest rates.
“We have a very special situation of interest rates at zero and from a monetary policy standpoint we absolutely can’t raise rates,” Zurbruegg said when asked why the SNB didn’t increase rates to solve the property-market issue.
None of the 12 economists in a Bloomberg survey expects a rate increase in the first six months of this year and only one sees the SNB raising interest rates in the third quarter. The SNB has held rates at zero since August 2011.
Switzerland introduced rules in July to cut mortgage- lending risks, including measures that will give the government the discretion to raise capital requirements for banks to target specific parts of the credit market. The SNB would have to request such a buffer.
“While we -- after consulting with Swiss financial regulator Finma -- initiate such a process, the government makes the decision,” Zurbruegg said. He declined to say whether the SNB had submitted a request.
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