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The Swiss Bankers Association criticized the central bank’s policy of negative rates, saying it was causing “massive structural damage” to the economy.
At -0.75%, the Swiss National Bank’s policy rate is the lowest in the G-10 as the central bank tries to stem appreciation pressure on the haven franc. With momentum flagging, euro-area officials are likely to announce a further cut to already sub-zero interest rates later on Thursday and may also announce new asset purchases. That could prompt the SNB to deliver a rate cut of its own.
In addition to hampering Swiss banks’ competitiveness internationally, negative interest rates are “result in bubbles and damage the competitiveness of the Swiss economy long term because they keep unprofitable companies alive artificially,” the sector representative said. “Negative interest rates also put the pensions of Swiss citizens at risk. A further lowering of interest rates would further exacerbate this issue.”
Unlike neighboring Italy, Switzerland hasn’t struggled with non-performing loans on banks’ balance sheets. SNB President Thomas Jordan has also said that it’s low real interest rates globally that are making life difficult for savers.
The SNB’s next policy announcement is scheduled for Sept. 19.
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