The Swiss National Bank could push interest rates deeper into negative territory, Chairman Thomas Jordan said in a magazine interview, warning that turmoil in Europe could revive the franc’s traditional role as a safe-haven currency.
Asked whether the SNB could lower rates further, Jordan told Swiss magazine Bilanz: “We have gone relatively far with the negative interest rates. At present we are monitoring the situation closely. We do not rule out anything.”
Just over a year ago, Switzerland’s central bank shocked financial markets by abandoning a cap of 1.20 francs per euro it had defended for three years to shield the export-oriented economy from the pain of an overvalued currency.
In December 2014 the SNB introduced negative interest rates in an effort to make the safe-haven franc less attractive. It now charges 0.75 percent for some bank deposits at the SNB and also aims to keep three-month LIBOR rates around -0.75 percent.
The SNB’s policy aims to weaken the franc, Jordan said in the interview published on Thursday. “For this purpose, we have negative interest rates and we are ready to intervene in the forex market.”
The euro plunged against the franc when the cap was removed but has recovered this year to over 1.11 francs. It gained on Jordan’s comments to trade around 1.0970 at midday.