Economy: Negative interest rates threaten to rise – News Economy: Money & Finance

Savings may soon disgust everyone. Savers themselves, of course, but also banks, pension funds and a host of insurers. The Swiss National Bank (SNB) risks increasing negative interest rates on sight deposits placed on transfer accounts. And maybe already before the end of this month! The plan would drop from -0.75%, introduced in January 2015, to -1%.

No! The broadcasting institute does not confirm this. But the clues are multiplying. As Maxime Botteron himself, an economist at Credit Suisse, explains: “While central banks tend to soften monetary policy overall, we now expect the SNB to drop to a key rate of -1% between April and June.” However, the expert does not exclude circumstances favoring an acceleration of the process.

“If the European Central Bank (ECB) cuts its own rates by 20 basis points on Thursday, the SNB will most likely need to follow this example, dropping itself to -1%. Either immediately after the ECB’s announcement on March 12, or a week later, “said Maxime Botteron. March 12 and 19 remain the official dates for possible monetary policy adjustments decided by the two central banks. In the context of an epidemic of coronavirus, let us remember, so conducive to concern and the search for safe haven values. So at the request of francs.

Currency manipulation?

In this regard, this week has just started as a real alert. On Monday, the euro paid little more than 1.05 francs. Unheard of since the first quarter of 2015, just after the abandonment of the floor rate of the euro against the franc, introduced on September 6, 2011. The SNB could therefore appear very tempted to add to its massive purchases of currencies an even more negative interest rate in order to combat the strong franc.

Especially since the SNB is very controlled during its interventions on the foreign exchange market. After withdrawing it in May 2019, Washington last month put Switzerland back on its watch list due to suspected currency manipulation. “In our opinion, the SNB’s means of intervention have been limited as long as the American authorities keep Switzerland on this list,” Thomas Flury, currency expert at UBS, told us last month.

Weapon against the strong franc

The SNB chairman of the board, Thomas Jordan, also points out that a negative interest rate not only serves as a weapon against the strong franc, but also against deflationary excesses. The Credit Suisse economist also insists on current trends: “We are expecting a serious correction in the SNB’s inflation forecasts downwards, due to the fall in crude oil prices. If these do not rise again, the SNB could lower its inflation forecast for the current year to -0.3%. A level significantly lower than its own definition of price stability. ”

Despite these many elements, it remains difficult to claim that everything is pleading in Switzerland for an increased negative interest rate. Economy Switzerland is still concerned that this system would harm the economy of the whole country. The Swiss Bankers Association has repeatedly argued that negative interest rates penalize the profitability of its members. The results of some of them have often denied the relevance of such a finding. Investors do not appear reassured. UBS shares lost almost a fifth of their value over a year and Credit Suisse shares almost a quarter.

Created: 03/10/2010, 21h54

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