SNB Chairman says Swiss Franc is a safe haven in uncertain times; conflict in Middle East can increase appreciation pressure on the Franc;
- SNB readiness to intervene on FX market is elevated.
- Policy interest rate is the main tool, but there are situations where FX interventions are more suitable.
- Negative interest rates worked in the past, but they had negative side effects.
- Prepared to introduce negative rates but the hurdle to lower rates into negative area is higher.
Context
The SNB Chairman's remarks highlight the Swiss Franc's status as a safe haven amidst geopolitical tensions, particularly with ongoing conflicts in the Middle East potentially driving appreciation. The readiness to intervene in the FX market signals a proactive stance, particularly if pressures on the Franc escalate. Additionally, while the policy rate remains the primary tool, the Chairman's caution on reintroducing negative rates suggests a commitment to more conventional monetary strategies unless absolutely necessary.
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