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Swiss Franc Falls as SNB Monetary Easing Has Not Reached Limit

October 25, 2016 at 11:59 by Vladimir Vyun

Swiss coins on franc notesThe Swiss franc fell today as policy makers of the Swiss National Bank were defending the current negative interest rates and signaled that monetary easing has not yet reached its limit.

Yesterday, SNB Chairman Thomas Jordan defended the low rates, saying:

 

Despite these monetary policy challenges and potential side-effects, in Switzerland the negative interest rate is currently indispensable, owing to the overvaluation of the Swiss franc and the globally low level of interest rates.

He also stated that borrowing costs has not yet reached their lower limit:

The effective lower bound for interest rates has not yet been reached, but we know that it exists.

Today, Vice Chairman Fritz Zurbruegg answered to concerns that the inflated size of balance sheet may limit central bank’s room for action:

We have not set out any limits for the expansion of our balance sheet.

USD/CHF rose from 0.9934 to 0.9947 as of 11:51 GMT today. EUR/CHF edged up from 1.0806 to 1.0824.

If you have any questions, comments, or opinions regarding the Swiss Franc, feel free to post them using the commentary form below.

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