By John Revill
ZURICH (Reuters) – The Swiss National Bank “is not anywhere close” to starting a normalisation of its expansive monetary policy based on the world’s lowest interest rate and currency interventions, governing board member Andrea Maechler said on Monday.
The central bank has not started to reduce its vast balance sheet, Maechler told a UBS economics event, adding the SNB did not have a settled sequence of actions it would take when it eventually decided to change course.
The SNB has for the last six years used a policy rate of minus 0.75% and a readiness to intervene in currency markets to stem appreciation pressure on the Swiss franc.
“Our expansionary monetary policy is absolutely necessary,” Maechler said, adding any future changes would have to be done cautiously.
When calculating when to change policy the central bank would examine Swiss inflation as well as global interest rates, she added.
The SNB’s negative rates – designed to make Swiss franc investments less attractive to foreign investors – have come under fire from savers and banks, who are passing them on to customers.
Maechler recognised this, and said the SNB was committed to reducing the burden on banks by raising the amounts exempted from the rates. [Z8N2M701Q]
The safe-haven franc remains “highly valued” at present, she added, more so against the euro than against the dollar.
The currency’s strength was dampening price rises in Switzerland, Maechler said, while there was still room for output to rise in Switzerland to head off inflation.
The SNB saw inflation rising, but remaining below a rate of 1%, well within the central bank’s target range of 0-2%, which it defines as price stability.
“We see an uptick in inflation, but coming back to a situation of price stability, which is a good thing,” Maechler said.
(Reporting by John Revill; Editing by Michael Shields and Peter Graff)
