ZURICH (Reuters) - Swiss National Bank Chairman Thomas Jordan said negative interest rates were still needed to tame the Swiss franc, which he said remained “highly valued.”
“Switzerland has had a strong franc for a long time and it remains highly valued,” Jordan told an event in Zurich on Tuesday.
“That’s why we have low interest rates, they should work against the franc’s valuation. If we were to change the interest rates, the franc would appreciate.”
The Swiss franc has lost nearly nine percent in value versus the euro last year, giving some respite to Swiss exporters hurt by the currency’s surge which made their products much more expensive in their main market.
Jordan said the current negative interest rate regime, a pillar of the SNB’s policy to limit the franc’s strength, was needed to maintain the bank’s goal of price stability.
“This means that against the background of the international situation, we have these very low interest rates or negative rates,” he said.
Jordan said he could not give a forecast when a ‘normal’ interest rate would return.
He defended the SNB’s decision to lift its cap of the franc versus the euro three years ago. Although he recognised the difficulties it caused many Swiss companies, fears of a recession or a deindustrialisation of Switzerland had not materialised.
Reporting by John Revill and Angelika Gruber, Editing by William Maclean