SNB’s Zurbruegg says negative rates key to prevent rise in franc

Bloomberg

The Swiss National Bank’s (SNB) negative interest rates remain essential to prevent a rise in the franc that thwart economic growth, Vice President Fritz Zurbruegg told
Sonntagszeitung in an interview.
Although the SNB will raise borrowing costs when necessary, “at the moment we need the negative interest rates due to the situation globally,” he said. “If we were to hike interest rates now, the franc would appreciation markedly, economic growth would slow and joblessness would increase.”
Swiss National Bank sight deposits fell for the first time in seven weeks, suggesting the central bank has scaled back interventions to weaken the franc. The SNB’s monetary policy consists of a deposit rate of -0.75% plus a pledge to wage currency market interventions, if necessary. The institution’s next policy assessment is scheduled for September 23, and the central bank is likely to keep rates unchanged.
“The pickup in inflation in Switzerland is temporary, in the medium term we expect it to stay low,” he said.
SNB President Thomas Jordan, who took a leave of absence on medical grounds last month, is recovering well, Zurbruegg said. The two are in regular contact by telephone, but no return date for Jordan has yet been fixed. Finding a successor “isn’t a topic,” Zurbruegg said. “Thomas Jordan will take up his post again.”