1,000-Swiss-franc banknotes lie in a box at a Swiss bank in Zurich, April 9, 2019. REUTERS/Arnd Wiegmann
June 13, 2019
By John Revill and Silke Koltrowitz
BERN (Reuters) – The Swiss National Bank stuck to its ultra-loose monetary policy on Thursday, blaming rising trade tensions between the United States and China for a spike in the safe-haven Swiss franc.
The central bank kept its policy of negative interest rates and readiness to intervene in what Chairman Thomas Jordan called “fragile” foreign exchange markets.
“When the trade dispute between the U.S. and China escalated again in May, the Swiss franc and the Japanese yen appreciated,’ Jordan told a news conference.
“Both currencies are sought as safe havens in periods of uncertainty. In light of the high valuation of the franc and the fragility of the situation, our willingness to intervene remains necessary, as does the negative interest rate.”
This month, the franc reached its highest level against the euro in nearly two years on trade concerns, although the SNB did not change its description of the franc from “highly valued”.
The central bank also introduced a new SNB policy rate, to replace its previous target for three-month Libor.
“From now on, it will use this rate in taking and communicating its monetary policy decisions. The SNB policy rate replaces the target range for the three-month Libor used previously, and currently stands at −0.75%,” the central bank said.
“The SNB will seek to keep the secured short-term Swiss franc money market rates close to the SNB policy rate,” it added. “The reason for introducing the SNB policy rate is that the future of the Libor is not guaranteed.”
The SNB kept an interest rate of -0.75% on balances it holds for commercial banks above a certain threshold, as forecast in a Reuters poll.
(Reporting by John Revill and Silke Koltrowitz; editing by John Miller and Kevin Liffey)
