Swiss National Bank Prepared to Implement Negative Interest Rates

Swiss National Bank policymaker Petra Tschudin announced that the central bank is prepared to implement negative interest rates if necessary to keep inflation within its medium-term target range of 0% to 2%. This possibility comes as inflation slowed to 0.4% in July, following a rate cut to zero last year that the bank has maintained since.

Tschudin stated that while negative rates function differently than positive ones, the option remains available to the bank. She explained that the Swiss National Bank avoids providing specific forward guidance because Switzerland is a small, open economy highly susceptible to external shocks. According to Tschudin, detailed advance declarations of monetary policy would be difficult to maintain without incurring adjustment costs.