18 Dec 2014
SNB unexpectedly sets negative interest rates, ready to do more
FXStreet (Córdoba) - The Swiss National Bank moved a step further and decided to set negative interest rates in order to curb demand for the franc.
The SNB set the rate for sight deposits at -0.25% (down from 0.00%) starting January 22nd 2015, which is, coincidence or not, the same day that the European Central Bank next meeting.
Furthermore, the SNB warned it is ready to take further measures if needed and reaffirmed its commitment to the EUR/CHF floor at 1.20.
In the subsequent conference, President Jordan said that uncertainty on the financial markets have increased demand for safe haven investments and admitted the SNB had to intervene in the FX market in recent days to defend the EUR/CHF cap. He added they are committed to purchasing unlimited quantities of FX.
Jordan also said negative rates are likely to remain in place “for some time”.
The Swiss franc slumped across the board following the announcement, with EUR/CHF rising nearly 100 pips to a 2-month high of 1.2093 before pulling back. USD/CHF hit a 2 ½-year high of 0.9847.
The SNB set the rate for sight deposits at -0.25% (down from 0.00%) starting January 22nd 2015, which is, coincidence or not, the same day that the European Central Bank next meeting.
Furthermore, the SNB warned it is ready to take further measures if needed and reaffirmed its commitment to the EUR/CHF floor at 1.20.
In the subsequent conference, President Jordan said that uncertainty on the financial markets have increased demand for safe haven investments and admitted the SNB had to intervene in the FX market in recent days to defend the EUR/CHF cap. He added they are committed to purchasing unlimited quantities of FX.
Jordan also said negative rates are likely to remain in place “for some time”.
The Swiss franc slumped across the board following the announcement, with EUR/CHF rising nearly 100 pips to a 2-month high of 1.2093 before pulling back. USD/CHF hit a 2 ½-year high of 0.9847.