Swiss National Bank Governing Board member Fritz Zurbruegg said the central bank won’t be introducing negative interest rates.
“Negative interest rates in form of policy rates are definitely not on the cards in Switzerland,” Zurbruegg said in a speech in Zurich today. He said that the move by UBS AG and Credit Suisse Group AG to charge financial institutional clients for cash balances held in Swiss francs was a “logical business decision.”
The SNB has kept its benchmark interest rate at zero percent since August 2011 and imposed a ceiling on the franc versus the euro since the following month. The central bank forecasts that consumer prices will fall 0.1 percent this year before rising 0.4 percent in 2014, and Zurbruegg said he doesn’t “imminent inflation pressures.”
“You have global growth which is only gradually, gradually recovering,” he said. “On the other hand you have spare capacity in many countries, including Switzerland, so from that point of view there is no immediate upward pressure on inflation rates.”
The franc weakened 0.4 percent to 1.2324 against euro as of 6:05 p.m. Zurich time, taking its decline this year to 2 percent. Against the dollar it was at 90.86 centimes.
On the outlook for interest rates, Zurbruegg said: “I remain convinced that we will be moving up as soon as economic fundamentals once again come to bear.”
“The turning point is economic growth -- once we get economic growth going, we are going to see things normalize,” he said. The SNB “is absolutely committed to low and stable inflation rates.”