SNB bows to pressure from banks for relief from negative rate
The Swiss National Bank (SNB) has offered banks some relief from negative interest rates, saying it would exempt more of their reserves from the cost of the policy.
The finance industry has long complained about the impact of sub-zero rates on profitability, and the Swiss Bankers Association said this month it was causing “massive structural damage” to the economy.
On Thursday, officials led by SNB President Thomas Jordan responded, saying the low-rate environment around the world has “become more entrenched and could persist for some time yet”. They will exempt 25 times minimum reserves from November 1, up from 20 currently, and review the level monthly.
The decision came as the SNB held its policy rate and deposit rate at an ultra-low minus 0.75%. It also reiterated its currency intervention pledge, saying the franc is highly valued.
There were also huge downgrades to growth and inflation. The SNB now sees growth as low as 0.5% this year, from around 1.5% previously. Inflation will almost stagnate in 2020 and be just 0.6% in 2021.
Busy week
The Swiss policy decision comes in a busy week for central banks after the European Central Bank’s recent announcement of a new stimulus package. The Federal Reserve on Wednesday cut its key rate for the second time this year, though Chairman Jerome Powell said only “moderate” policy moves should be sufficient to sustain the US expansion.
The Bank of Japan left policy unchanged on Thursday but said it would take a closer review of the economy next month, and Indonesia’s central bank cut its key interest rate for a third straight month. Norway bucked the global trend with a rate hike.
As the US-China trade war hits confidence and depresses momentum, Switzerland hasn’t been immune, with manufacturing weakening this year. It’s also seen the franc strengthen, and data suggest it’s been intervening to tame the currency.
With a potential no-deal Brexit looming in October, there’s a chance the haven currency could come under renewed appreciation pressure. The SNB intervened after the UK’s 2016 referendum to leave the European Union and has a history of announcing ad-hoc rate cuts, most famously in 2015.
More
More
Bank lobby group demands end to negative interest rates
This content was published on
SBAExternal link Chairman Herbert Scheidt said on Thursday that a normalisation of interest rates “appears a long way off”. “Unfortunately, the societal, structural and long-term damages will become even greater the longer we find ourselves in this ‘lower forever’ environment,” he told the media. Banks are suffering from having to pay for the privilege of…
Swiss climate activists block vehicles near Gotthard tunnel
This content was published on
Around ten climate activists briefly blocked the A2 motorway near the northern entrance of the Gotthard tunnel on Thursday.
Watches belonging to Michael Schumacher up for auction
This content was published on
Schumacher's family is auctioning off eight rare watches from his collection in Geneva. The Christie's auction will take place on Monday.
Joya Marleen and Baschi named best solo acts at Swiss Music Awards
This content was published on
St. Gallen singer Joya Marleen and Baschi from Basel were named artists of the year at the Swiss Music Awards 2024 on Wednesday night.
Swiss authorities announce cost-cutting in asylum sector
This content was published on
The government notably wants to improve integration into the labour force, particularly for people with protection status S.
Various leaders confirm participation at Ukraine peace conference
This content was published on
The presidents of Poland, Finland, and Latvia and the prime ministers of Spain and Belgium will be at the Swiss-hosted talks in mid-June.
This content was published on
In the winter season up to April 2024, railway and cable car operators ferried 3% more visitors compared to the previous winter, and 5% more than the five-year average.
Rhine flooding: Swiss to invest CHF1 billion with Austria
This content was published on
As part of an international agreement with Austria, the Swiss government wants to pump CHF1 billion ($1.1 billion) into flood protection measures along the Rhine over the next three decades.
Swiss government proposes CHF10 million UNRWA donation
This content was published on
After months of debate, Switzerland plans to give CHF10 million ($11 million) to the UN agency this year, rather than the CHF20 million initially foreseen.
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.
Read more
More
Even with negative interest rates, Swiss banks post positive results
This content was published on
In spite of ups and downs in the stock market and negative interest rates, Swiss banks finished 2018 with an increase in operating income and profits.
This content was published on
The adage in financial markets is “do not fight the central bank”. But can central banks fight the US president? The SNB may be about to find out.
How the Swiss National Bank will raise interest rates
This content was published on
Voices in Switzerland criticising the monetary policy of the SNB are getting louder. A cunning plan is needed – and fortunately one exists.
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.