Swiss can cut rates more but need fiscal action:IMF

Bloomberg

Switzerland has room for further easing, though fiscal policy needs to be better utilised to boost long-term growth, according to the International Monetary Fund (IMF).
The Swiss National Bank (SNB) is using some of the world’s lowest interest rates and a threat to intervene in currency markets to stem appreciation on the franc. Yet even with a deposit rate at minus 0.75 percent, the franc touched a 20-month high against the euro last week as risk-aversion among investors picked up.
“There is room on both fronts” if further easing is needed, IMF Mission Chief Rachel van Elkan said following a so-called Article 4 consultation in Bern. There is no predefined upper limit on the central bank’s balance sheet for interventions, but one wouldn’t want to increase it “much further,” she said, adding that as for interest rates, it wasn’t “ever knowable” in advance how far below zero they could be cut.
Switzerland’s banks have criticised the negative interest rates for crimping profitability, and there has even been the suggestion that the SNB could tighten policy unilaterally on the grounds that interest rate changes have very little impact on the exchange rate.
The IMF also called on low-debt Switzerland to boost its fiscal expenditure, on the grounds that when interest are very low, “fiscal multipliers are strong.”