FRANKFURT (MNI) – The Swiss National Bank will enforce its 1.20
franc-euro exchange rate for as long as needed and stands ready to take
further measures should deflationary risks emerge, SNB interim President
Thomas Jordan said in an interview with Swiss paper NZZ published on
Friday.
“At the moment, there is simply no alternative [to the exchange
rate cap],” Jordan told the paper, citing negative effects of exchange
rate volatility and of a further rise of the franc on the real economy.
“At 1.20 per euro, the franc is still high,” Jordan said.
Former SNB President Philipp Hildebrand’s departure on January 9
will not change the central bank’s policies, Jordan said.
The SNB will stick to its forex policy “until it is no longer
needed,” he said. “The exchange rate cap is in place for an indefinite
period. We will absolutely defend it.”
Asked about calls to move up the minimum rate so as to weaken the
franc further, Jordan said that “should economic developments or
deflationary risks demand, we will take measure to ensure price
stability and protect the economy.”
Jordan said that while the introduction of the exchange rate target
had reduced downside risks, negative shocks ahead could not be excluded.
Risks of inflationary pressures, on the other hand, are currently
not on the horizon, Jordan said. “This could change should there be a
strong economic recovery and the liquidity remain in the system for too
long. But we are far, far away from that,” he said.
On a more general note, Jordan said that the role of central banks
had changed significantly as a result of the current crisis, with banks
taking on fiscal policies. “Central banks must be careful that they do
not have to take measures — due to inactivity of other actors — that
are not their job,” he cautioned.
–Frankfurt newsroom +49 69 72 01 42; Email: jtreeck@marketnews.com
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