Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

SNB Bows to Pressure From Banks for Relief From Subzero Rate

EconomySep 19, 2019 05:35AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. SNB Bows to Pressure From Banks for Relief From Subzero Rate

(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.

The Swiss National Bank offered banks additional relief from its negative interest rates, a move that could give it some leeway to cut them further if needed.

With the SNB’s policy rate at minus 0.75%, the finance industry has long complained about the impact on profitability. Officials led by Thomas Jordan responded on Thursday, saying they’ll exempt more of banks’ reserves from the cost of their monetary policy.

The SNB won’t impose charges on amounts as much as 25 times minimum reserves from Nov. 1, up from 20 currently, and review the level monthly. The move could help to prevent any further easing being passed on by banks to retail savers. Explaining the decision, the SNB said the low-rate environment around the world has “become more entrenched and could persist for some time yet.”

The measure comes a week after the European Central Bank cut its deposit rate and introduced a tiering system. While the SNB kept rates on hold, a deteriorating global outlook and no-deal Brexit could put upward pressure on the haven franc, forcing a policy response.

“Despite not acting at this meeting, the SNB signaled strongly that further policy easing is on the way,” economists at Citigroup (NYSE:C) including Christian Schulz said in a note.

In its policy statement, the SNB also said the franc is highly valued and reiterated its intervention pledge. The currency touched a two-year high against the euro earlier this month.

The franc was up 0.3% at 1.0965 per euro at 11:25 a.m. in Zurich.

Citing downside global risks, the SNB also made huge downgrades to the outlook. It now sees growth as low as 0.5% this year, from around 1.5% previously. Inflation will almost stagnate in 2020 and be just 0.6% in 2021.

The Swiss policy decision comes in a busy week for central banks. On Wednesday the Federal Reserve cut its key rate for the second time this year.

The Bank of Japan left policy unchanged on Thursday but said it’ll take a closer review of the economy next month. Indonesia’s central bank cut its key interest rate for a third straight month. Norway bucked the global trend with a rate hike.

(Updates with comment from economist in fifth paragraph.)

SNB Bows to Pressure From Banks for Relief From Subzero Rate
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email