SNB’s Maechler defends negative rates, currency interventions

Negative interest rates and a readiness to intervene in the foreign currency markets are still needed to ward off a rise in the franc that would trigger deflation in Switzerland, Swiss National Bank governor Andrea Maechler said on Tuesday.

“Our mandate is not to defend the Swiss franc, but price stability,” Maechler told an event in Zurich. “We are a small, open country, which means the exchange rate is important for our monetary conditions and is linked to prices.

“We have seen that if the franc is too strong, inflation goes negative,” she added.

The SNB has introduced negative interest rates and a readiness to intervene in the currency markets to ward off demand for the franc. “We are now in a positive  area, but it is still low.”

Maechler’s comments echoed her governing council colleagues Thomas Jordan and Fritz Zurbruegg, who have both said of late that the SNB‘s ultra-loose monetary policy remains appropriate in an environment of heightened political risks and fragile currency markets./


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