Swiss National Bank Faces High Bar for Negative Rates
The Swiss National Bank (SNB) is hesitant to move interest rates below zero despite its ability to do so as the Vice Chairman Antoine Martin notes the higher threshold required. Negative rates pose challenges despite low inflation. Dollar weakness impacts inflation less than franc strength.
- Country:
- Switzerland
The Swiss National Bank (SNB) is exercising caution regarding interest rates below zero, as noted by Vice Chairman Antoine Martin. While negative rates have been effective in the past, they present challenges for banks, investors, and households.
The SNB has previously implemented negative rates from late 2014 to 2022 but is currently maintaining a zero policy rate amid low inflation, which edged to 0.2% in July. The bank anticipates inflation to rise in the coming quarters, dismissing immediate deflation risks.
Martin emphasized that the Swiss franc is not overly strong but rather the dollar is weak, minimizing concerns over inflation dynamics. Additionally, he noted the uncertain economic outlook as Switzerland faces U.S. tariffs at 39%, though the central bank remains apolitical in this domain.
(With inputs from agencies.)
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