Petra Tschudin SNB currency guardian emphasizes the importance of negative interest rates for the exchange rate
Petra Tschudin, member of the Governing Board of the Swiss National Bank (SNB), emphasizes the importance of negative interest rates for Switzerland in an interview.
14.02.2025, 05:55
14.02.2025, 06:04
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- Petra Tschudin, member of the Governing Board of the Swiss National Bank (SNB), emphasizes the importance of negative interest rates for Switzerland in an interview.
- "We are pursuing a monetary policy in the interests of the country as a whole," she replied to the question of whether the SNB was pursuing an export promotion policy with its focus on the exchange rate.
- It is not about supporting one economic sector in particular, said Tschudin.
- Rather, the exchange rate in Switzerland has a major influence on price stability.
For Switzerland as a "small, open economy, the negative interest rate instrument is important because we can use it to control the interest rate differential even in a low interest rate environment, if necessary, so that the Swiss franc becomes less attractive against other currencies and thus does not appreciate excessively," said Tschudin in an interview with the "Neue Zürcher Zeitung".
"We pursue a monetary policy in the interests of the country as a whole," she replied to the question of whether the SNB was pursuing an export promotion policy with its focus on the exchange rate. It is not about supporting one economic sector in particular, said Tschudin.
Rather, the exchange rate in Switzerland has a major influence on price stability. Ensuring this and keeping inflation between zero and two percent is the SNB's goal, Tschudin recalled. "If inflation regularly falls below zero, wages would have to be cut on a regular basis," said the economist, whose job, according to the NZZ, includes investing the SNB's foreign exchange reserves. Tschudin heads the SNB department, which is responsible for foreign exchange trading, the money market and investment policy, among other things.
Central banks can combat deflation by cutting interest rates, but with a current key interest rate of 0.5 percent, the SNB no longer has much room for maneuver.
Negative interest rates if necessary
SNB Chairman Martin Schlegel did not rule out negative interest rates at the end of January. "The SNB doesn't like negative interest rates either," Schlegel told Bloomberg TV at the World Economic Forum in Davos. If the step becomes necessary, the SNB will take it.
Annual inflation in Switzerland fell further in January. However, the decline was limited, which is good news for the SNB. Inflation in January was still 0.4 percent after 0.6 percent in December, as reported by the Federal Statistical Office on Thursday.
Opinions differ on the impact of the latest inflation data on the SNB's next interest rate decision. Some economists expect it to remain at the current level. For others, the question is when the SNB will lower the key interest rate to zero - and what the monetary policy course will look like afterwards.