SNB's Maechler says Swiss France remains overvalued

Author: Ryan Littlestone | Category: Central Banks

Speaking in Geneva

  • Swiss franc still remains significantly overvalued
  • SNB remains willing to intervene on the foreign exchange market where necessary
  • The situation on the foreign exchange market has not yet normalised
  • SNB intervened in  markets following Greek referendum announcement in summer
  • Future SNB losses may occur with expansion of balance sheet
  • Economic conditions remain challenging in Switzerland
  • Temporary negative inflation still undesirable
  • Medium-term price stability is not in doubt
  • SNB inflation average 0% for 2014, forecasting -1.2% 2015 and -0.5% for 2016
  • Inflation for 2015 negative due to abandonment of floor and drop in oil prices
  • SNB believes economy has returned to a moderate path of recovery, although significant
  • downside risks remain
  • SNB forecasts GDP to grow by close to 1% this year, despite Q1 contraction
  • Swiss GDP is now nearly 8% above its pre-crisis peak
  • Applying the negative interest rate broadly allows it to function effectively
  • Negative interest rates reduce relative attractiveness of Swiss franc
  • Mortgage rates have not fallen to the same extent as interest rates on money and capital
  • markets
  • SNB expects the global economy to grow moderately in the coming years
  • The size of the SNB's balance sheet reflects our monetary policy measures

Pretty standard fare from the SNB

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