November 18, 2018 / 10:22 AM / a month ago

Swiss monetary policy appropriate, SNB's Maechler says

FILE PHOTO: Swiss National Bank (SNB) Governing Board member Andrea Maechler gestures after a news conference in Bern, Switzerland December 14, 2017. REUTERS Denis Balibouse/File Photo

VIENNA (Reuters) - The Swiss National Bank’s policy of negative rates combined with the ability to intervene in currency markets if needed is appropriate given risks such as Brexit, SNB Governing Board member Andrea Maechler said in remarks published on Sunday.

Financial markets are fragile, with sources of risk including Brexit, Italy and the trade dispute between the United States and China, Maechler told newspaper Le Matin Dimanche, adding that the level of the Swiss franc remained high.

“In the current context, the negative interest rate remains indispensable for Switzerland. It enables us to restore, at least partially, a difference between Swiss interest rates and those abroad, thus reducing the franc’s attractiveness,” Maechler said.

The Swiss franc is a traditional safe haven, which can pose problems for the country’s exporters as a strong franc makes their products more expensive to foreign buyers.

The Swiss government and the SNB see the franc as highly valued, the cabinet said earlier this month, adding that the risk of a worsening international economic situation had increased.

“In the current context we are persuaded that our monetary policy based on the negative interest rate and our capacity to intervene on the currency market if needed is appropriate,” Maechler said.

Asked whether the SNB agreed with a recent study that found there was no risk of a property bubble, she said: “No. Imbalances persist in some segments.”

Price corrections are possible, particularly in the segment of buildings bought for rental income, and the SNB is following the situation closely, she said.

Reporting by Francois Murphy; Editing by Dale Hudson

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