(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.
The Swiss National Bank left the door open to a further easing of policy to rein in the “highly valued” franc, though a new currency cap isn’t in the cards for now.
“Not at this moment,” SNB President Thomas Jordan told Bloomberg TV’s Francine Lacqua in response to a question about a new minimum exchange rate for the Swiss franc. “At the moment we have the system that we have. We believe this is the right one.”
Negative interest rates plus a pledge to use currency market interventions are the SNB’s current tools of choice in its long-running battle with too strong a currency.
The deposit rate is at a record low of -0.75%. Swiss officials have argued its necessary to maintain spreads with euro-area assets and keep the franc from appreciating.
“We still have the room to cut rates, if necessary, but of course we know there are also side effects,” and officials always conduct a cost-benefit analysis, he said.
The Swiss franc touched a session low against the euro after the comments. It stood at 1.07386 at 10:22 am in Zurich.
The the U.S. Treasury put Switzerland back on its currency watch list this month after data suggested the SNB stepped up interventions in the latter half of last year. The central bank generally doesn’t comment on its market activities though it does publish an annual tally.
“We do not manipulate the currency but we have to intervene to steer monetary conditions in Switzerland,” Jordan said. “We never intend to weaken the Swiss franc to get an advantage over other countries but rather we have to avoid that the Swiss franc becomes too strong -- so that we have a deflationary environment.”