The president of the Swiss National Bank (SNB), Martin Schlegel, warned on Friday that an “economic slowdown in Switzerland” cannot be ruled out.
Additional quotes
The situation of commercial policy is creating high uncertainty for all countries, including Switzerland.
Price stability cannot prevent uncertainty related to commercial policy, but remains very important.
Commercial policy could fragment the global economy.
The main instrument is the interest rate, but we can also use interventions in the currency market to influence monetary conditions.
USD/ChF reaction to Schlegel’s comments
At the time of writing, USD/CHF It remains in the rebound above 0.8300, adding 0.45% in the day.
SNB FAQS
The Swiss National Bank (SNB) is the central bank of the country. As an independent Central Bank, its mandate is to guarantee the stability of medium and long term prices. To guarantee price stability, SNB aims to maintain adequate monetary conditions, which are determined by the level of interest rates and exchange rates. For SNB, price stability means an increase in the Swiss consumption price index (CPI) below 2% per year.
The Board of Directors of the Swiss National Bank (SNB) decides the appropriate level of its official interest rate depending on its price stability objective. When inflation exceeds the objective or it is expected that it will exceed it in the predictable future, the bank will try to control excessive price growth by raising its official interest rate. The highest interest rates are usually positive for the Swiss Franco (CHF), since they lead to greater returns, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the CHF.
Yes. The Swiss National Bank (SNB) has intervened regularly in the exchange market to prevent the Swiss Franco (CHF) from being too much in front of other currencies. A strong CHF harms the competitiveness of the powerful export sector of the country. Between 2011 and 2015, the SNB implemented a fixed exchange rate with the euro to limit the progress of the CHF against the latter. The bank intervenes in the market using its large currency reserves, generally buying foreign currencies such as the US dollar or the euro. During high inflation episodes, in particular due to energy, SNB refrains from intervening in markets since a strong CHF makes energy imports cheaper, cushioning the price shock for households and suine companies.
SNB once meets the quarter (in March, June, September and December) to evaluate monetary policy. From each evaluation a decision on monetary policy and the publication of a medium -term inflation prognosis follow.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
