Swiss National Bank deputy board member Thomas Moser said policy makers remain ready to act if needed to ward off deflation.
While the introduction of the minimum exchange rate helped counter the franc’s “massive overvaluation,” the Swiss currency remains strong, he wrote in an article published in a magazine of the Swiss Economy Ministry in Bern today. “If the economic outlook and deflationary risks warrant it, the SNB is ready to take further measures at any time.”
The SNB on Sept. 6 was forced to impose a currency ceiling for the first time since the 1970s after the franc’s surge to a record against the euro threatened to push the economy into deflation and erode exports. Nestle SA, the world’s biggest food company, is among Swiss companies that have been hurt by the franc and Swiss Economy Minister Johann Schneider-Ammann said yesterday the currency remains “overvalued.”
The Swiss currency, considered a haven in times of global turmoil, traded at 1.2074 versus the euro at 10:34 a.m. in Zurich, little changed on the day. Versus the dollar, it was at 91.82 centimes.
With his remarks, Moser echoed comments by Interim Chairman Thomas Jordan. The Swiss economy will probably expand about 0.5 percent this year, with consumer prices declining 0.3 percent, Moser wrote. He called “downward risks extraordinarily high.”
“For large parts of the Swiss economy, the situation remains difficult,” Moser wrote. “The franc remains highly valued and the weakening global demand will continue to weigh on exports.”