MNI POLICY: SNB Rates Could Go Lower; No Change to Strategy

By Luke Heighton

     BERN (MNI) - The Swiss National Bank (SNB) could lower its already negative

interest rates still further should the economic situation demand it, Governor

Thomas Jordan said Thursday.

     "We still have room to manoeuvre, we can go to an even more expansionary

monetary policy," Jordan said. "We have sufficient room to change our monetary

policy in order to react to certain shocks."

     Asked when the SNB might return to positive interest rates, Jordan said:

"If you look at the global economy at this moment, the point of time when

interest rates will go up is probably postponed and pushed further into the

future. This is of course relevant for us.

     "In the very long-term, we have to return to equilibrium interest rates,

and in our view this is clearly a positive rate," he added.

     Jordan declined to say what levels the Swiss franc would have to hit before

the SNB would intervene on the foreign exchange markets, or give any indication

as to possible future changes to the SNB's current description of the CHF as

"highly valued" and their knock-on effects on monetary policy.

     Similarly, Jordan declined to comment on the ECB's recent announcements

that suggest it may be considering further monetary easing. However, asked

whether the SNB would consider undertaking a review of its monetary policy

strategy, as is currently underway at the Fed and appears to be gaining support

at the ECB, Jordan said it was not necessary.

     "Every central bank is in charge of their own strategy," Jordan said.

"Depending on the domestic situation sometimes a change of strategy is

necessary. We look at the way our strategy works on a continuing basis, but we

are convinced that the way our strategy is set up is very sensible and has

helped us so far through a very difficult environment over the last ten years.

So we do not have any necessity to change a winning horse."

--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$E$$$,M$X$$$,M$$EC$]