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Swiss Central Bank if necessary to further lower interest rates

The Swiss Central Bank decided to lower the key interest rate, where appropriate, further into the negative range. This is the President of the Swiss national Bank (SNB), Thomas Jordan said in an Interview with the "NZZ on Sunday". "The Phase of low interest rates could persist for longer, and also to a further easing of monetary policy may be necessary," said the 56-year-old Central banker. "Our interest is not unlimited, but we certainly have the possibility for further reductions."

Recently, the SNB left the key rate unchanged at minus 0.75 percent. With the negative interest rates the Central Bank wants to make the franc for international investors, unattractive. Because he was regarded as a "safe port" and is therefore needed in turbulent times.

people to pull that off with still deeper interest in the great style of your money from the banks and hoarding home, not to believe Jordan. "The costs and risks of cash storage are greater than the costs of the negative interest rate we have at the Moment," he said. The SNB, therefore, assume that room is available.

Controversial measure

How long the over four years ago as an emergency measure, introduced negative interest rates to stop this, Jordan didn't dare forecast. "We believe that the current Situation will sooner or later be corrected. When, exactly, it is difficult to predict." Jordan stressed that the interest rates are independent of monetary policy on the decrease. Reasons are the demographic development and lower productivity are.

The national Bank is considering negative interest rates also criticism, including from the bankers Association. Critics do not find fault with the negative interest rates fulfilled their purpose. In addition, people with small savings would have benefited and a little bit of money in the pension Fund lose while owners of real estate and shares, it is called.

"is Our monetary policy for the current economic Situation," said Jordan. "We have never questioned, that there are side effects. However, we must have the overall interests of the country and are allowed to pursue any individual interests." If the national Bank would raise the key interest rate now, the result, according to Jordan, a stronger Swiss franc. "Unemployment would rise."

Counter-proposal for "helicopter money"

in Order to weaken the franc and to support the export-oriented economy, the SNB also in demand in the foreign exchange market. On the question of whether they could encounter interference in the U.S. political opposition, said Jordan: "We are in close contact with the U.S. Department of the Treasury, to explain our specific Situation. Our interventions aim never to a weakening of the Swiss franc at the expense of other economies."

The SNB President spoke also opposed to the proposal of a so-called helicopter money. The idea aims to boost the economy by the Central Bank to direct monetary gifts to be distributed to the citizens. "I'm not in favor of such concepts," said Jordan. "Because it is a mixing of monetary and fiscal policy, what is playing with fire." (scl/sda)

Created: 03.11.2019, 03:06 PM

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