Swiss National Bank can cut rates further or go negative, chairman says

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Finance

Posted By Global Banking and Finance Review

Posted on January 22, 2025

Swiss National Bank can cut rates further or go negative, chairman says

By Elisa Martinuzzi

DAVOS, Switzerland (Reuters) - The Swiss National Bank still has room to cut interest rates again and even take rates below 0% if Swiss inflation goes too low, Chairman Martin Schlegel said on Wednesday, although he could not say how likely such a step would be.

"At the moment we are at 0.5%," Schlegel told Reuters at the World Economic Forum in Davos, Switzerland. "This means that we still have some room.

"In Switzerland no one likes negative interest rates. Also the Swiss National Bank doesn't like negative interest rates. But if we have to do it, we would do it again," he added.

The SNB charged negative interest rates for nearly eight years from Dec. 2014 but exited the policy to tackle resurgent inflation after the COVID pandemic.

Price rises have ebbed in recent months, with Swiss inflation within the SNB's 0-2% target range since June 2023, easing to 0.6% in January.

The SNB has responded by cutting interest rates from 1% to 0.5% in December, its biggest reduction in more than a decade, with markets expecting more cuts this year.

Schlegel said the central bank would see whether further adjustments were necessary at its next meeting March.

"At the moment monetary conditions are appropriate, we decide from quarter to quarter and then we will see," he said, adding he could not give a likelihood of rates going negative.

(Reporting by Elisa Martinuzzi in Davos and John Revill; Editing by Dave Graham)

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