- Thomas Jordan, SNB President
The Swiss National Bank stands ready to intervene in currency market, the central bank's President Thomas Jordan said. Swiss policy makers have pledged repeatedly to intervene in the FX market in recent months, after abandoning a cap of 1.20 per Euro on the Swiss Franc in the beginning of the year. The cap exit caused the Franc to appreciate sharply and the Alpine economy now faces a year of falling consumer prices and sluggish growth. To offset the loss of the minimum exchange rate and discourage investors from holding Francs, the SNB decided to lower its deposit rate to minus 75 basis points. However, Jordan highlighted that the negative interest rates will not become the "new normal". The SNB foresees an inflation rate to remain in the negative territory, hovering around minus 1.1% for 2015. It also expects growth of "just under" 1% for this year. Yet, SNB President said the Swiss economy will probably successfully overcome its current challenges.
Last week, the central bank said it would eliminate exemptions from its policy of negative interest rates for certain public accounts, including the SNB's pension fund. The move confirms that the SNB's policy of negative interest rates has not been as effective at driving capital away from the Franc as the central bank had hoped.
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