SNB's Jordan: Negative rates will remain an important instrument, to be used if needed

Dhwani Mehta FXStreet

Following the Swiss National Bank's (SNB) decision to hike its policy rate by 75 bps on Thursday, Chairman Thomas Jordan noted that “negative rates will remain an important instrument, to be used if needed.”

Additional takeaways

Overall negative interest rate policy has proven its worth.

Franc's recent appreciation has helped to dampen inflation.

Without policy rate increase, forecast inflation would be significantly higher.

Further increases in policy rate cannot be ruled out.

SNB ready to intervene to prevent excessive weakening or strengthening of franc.

Swiss inflation likely to remain elevated for some time.

There are growing signs Swiss inflation is spreading to goods and services not affected by Ukraine war.

Market reaction

USD/CHF has paused its upsurge, consolidating at around 0.9772, as investors digest comments from the SNB Chief. The pair is gaining 1.16% on the day.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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