Swiss National Bank Chairman Martin Schlegel stated on Monday that he has not ruled out the possibility of implementing negative interest rates if necessary, emphasizing that such a decision would not be taken lightly. In an interview with broadcaster SRF, Schlegel mentioned, The SNB doesn't like negative interest rates, at the same time we can't rule negative interest rates out.
Schlegel highlighted the effectiveness of negative interest rates when previously utilized by the SNB but emphasized that the central bank would only reapply this policy if absolutely essential. He stated, We have seen that negative interest rates have served their purpose, while also stressing that such a move would not be made casually.
With Swiss inflation dropping to 0.6%, Schlegel has been discussing the potential of negative rates, with markets foreseeing a 64% possibility of a rate cut to 0.25% in March and a 27% chance of reaching 0% following the central bank's decision in June.
Schlegel refrained from speculating on future interest rate adjustments, noting that low inflation was not a concern for the central bank. Regarding inflation, he clarified, It is possible that we will have individual months with negative inflation, but that is not a problem. He reiterated the SNB's objective of maintaining price stability in the medium term within the range of 0%-2%.