SNB Has Room for Rate Cuts and More Interventions, Jordan Says

  • Central bank president comments in speech at AGM in Bern
  • SNB uses negative rates, interventions to keep franc in check

The Swiss National Bank has additional firepower on interest rates and interventions if needed to take pressure off the franc, President Thomas Jordan said.

“If necessary, we can lower the negative interest rate further or buy additional foreign currency,” Jordan said at the SNB’s annual shareholder meeting in Bern on Friday.

Since early 2015, Switzerland’s central bank has pursued a dual policy of a deposit rate of minus 0.75 percent plus a pledge to wage currency-market interventions to reign in appreciation pressure on the franc, which is popular among investors at times of market stress.

Given Switzerland’s low rate of inflation and underutilized production capacity, keeping policy expansive is the right course of action as the franc is still “significantly overvalued,” Jordan said. While in the past 12 months the global economy has gained steam, political uncertainty has intensified, he said.

“Without the negative interest rate and our willingness to intervene, the Swiss franc would be even stronger, inflation would fall once again, and unemployment would rise,” he said.

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