ZURICH (Reuters) - The Swiss National Bank does not have a target for the franc’s exchange rate and is ready to intervene in the market or lower interest rates further if needed to keep a lid on the currency, its deputy chairman was quoted as saying on Saturday.
“We do not have a new exchange rate target,” Fritz Zurbruegg told Swiss newspaper Basler Zeitung when asked why the SNB had not intervened heavily in the foreign exchange market recently.
The SNB lifted a cap on the Swiss franc versus the euro in January 2015 and is using a combination of negative interest rates and foreign currency purchases to keep the strong currency in check.
Zurbruegg said recent analysis showed the franc remained “significantly over-valued”.
“We’ve always said that we stand ready to intervene in the forex market at any time, in addition to the interest rate tool, to conduct our monetary policy,” he said in the interview.
The SNB has a negative interest rate of -0.75 percent, which it charges on sight deposits held at the SNB by banks and other financial market participants.
Zurbruegg said that because negative interest rates are a relatively new instrument the SNB was not able to predict what the side effects would be.
“It is obvious that we consider the effects, for example on savers or on cash demand, before each monetary policy decision. But in principle it is still possible to lower interest rates further.”
As to the prospect of Britain leaving the European Union, Zurbruegg said the SNB was considering different scenarios on the outcome of the British referendum on EU membership on June 23 when it considers monetary policy.
The SNB holds its next monetary policy meeting on June 16.
Reporting by Silke Koltrowitz; Editing by Robin Pomeroy