Latest news with #SwissFranc
News.com.au
14 hours ago
- Business
- News.com.au
Swiss central bank cuts interest rates to zero per cent
The Swiss National Bank cut interest rates to zero per cent on Thursday as inflation cools and the franc strengthens, while the economic outlook has deteriorated. The SNB, however, held off a decision to return to its era of negative rates — a policy that helped to curb the Swiss franc's rise but was unpopular among pension funds and other investors. The franc's movement is also under scrutiny in the United States, as the US Treasury Department added Switzerland to its watch list of countries likely to manipulate their currencies earlier this month. The Bank of England kept its key interest rate at 4.25 per cent on Thursday and Norway's central bank announced a surprise cut by a quarter point to 4.25 per cent. The decisions came a day after the US Federal Reserve maintained its benchmark borrowing costs unchanged, citing concerns over high inflation and slowing growth in the world's biggest economy. Gloomy outlook The SNB said its interventions in the foreign exchange market were not aimed at increasing the Swiss economy's competitiveness, but rather were attempts to ensure price stability. The Swiss currency is a safe haven investment that has climbed against the dollar since US President Donald Trump announced tariffs on imports in April. In Thursday's statement, the SNB — which has denied manipulating the franc — said it was still 'willing to be active in the foreign exchange market'. The SNB cited easing inflationary pressure in its decision to cut rates by a quarter point, but it also pointed to a gloomy economic forecast. 'The global economic outlook for the coming quarters has deteriorated due to the increase in trade tensions,' the central bank said, adding that the outlook for Switzerland remained uncertain. Karsten Junius, chief economist at the Swiss private bank J. Safra Sarasin, said it would 'not have been the appropriate time' to surprise the markets, and might even have 'harmed the SNB's standing' to do so. Cooling inflation The SNB said Swiss gross domestic product growth was strong in the first quarter of the year — largely due to exports to the United States being brought forward ahead of Trump's tariff manoeuvres. But stripping that factor out, growth was more moderate, and is likely to slow again and remain subdued for the rest of the year, the SNB said. The SNB expects GDP growth of one per cent to 1.5 per cent for 2025, and for 2026 too. The bank lowered its inflation forecast for 2025 from 0.4 per cent to 0.2 per cent, and for 2026 from 0.8 per cent to 0.5 per cent. Negative rates Between 2015 and 2022, the SNB's monetary policy was based on a negative interest rate of minus 0.75 per cent — which increased the cost of deposits held by banks and financial institutions relative to the amounts they were required to entrust to the central bank. Negative rates make the Swiss franc less attractive to investors as it reduces returns on investments. Overnight, the Swiss franc was down 0.02 per cent against the dollar and up 0.10 per cent against the euro. Adrian Prettejohn, Europe economist at the London-based research group Capital Economics, expected the SNB to move rates to negative 0.25 per cent at its September meeting due to deflation. 'There are also significant downside risks to inflation from trade tensions as well as heightened geopolitical uncertainty, which could push up the value of the franc further,' he said. Following the SNB's announcement, the Swiss franc rose slightly against the dollar and the euro. Switzerland's biggest bank UBS said it expected the SNB to keep its rate at zero per cent for the coming 12 months, and said the central bank's statement suggested it was 'not particularly worried about the current level of the Swiss franc exchange rate'. Kathleen Brooks, research director at the XTB trading platform, said that if the SNB wanted a weaker currency it was 'going to have to intervene directly in the foreign exchange market and sell francs, or it will have to reinstall a peg and defend the level it wants to achieve'.
Bloomberg
a day ago
- Business
- Bloomberg
SNB President Schlegel on Rate Cut Decision, FX Market
00:00 So today we decided to lower interest rates from 25 basis points by 25 basis points to zero. And the reason is that we observed lower inflation pressure in the last months and also quite low inflation. This led us to the decision to lower interest rates again. You said in March that further rate cuts are less likely now and still we see a rate cut today. Was was your hand today forced by how much the franc appreciated since the last interest rate decision. So we always come together as a board. We look at the data, we look at the models and we discuss. And given the lower inflation pressure that we observe in Switzerland, we came to the conclusion that this is the right decision to take today. But you didn't mention the franc in your answer now at all. Like, I think it's safe to say that the inflation pressures subsided because the franc went up. Right. There are some factors at work here. One is certainly the stronger Swiss franc, especially against the US dollar, but it's also tourism that is lower and it's also energy prices that is that were lower and put inflation to the downside to the downside at the Swiss National Bank. We'll look at more monetary conditions. Overall. This means interest rates in the one side, but also the exchange rate on the on the other side. And of course, given that the Swiss franc appreciated, this was certainly also a factor. Since you mentioned since you mentioned the oil price. So with the increase of the oil price from the newly enflamed way and the war in the Middle East, like there we see an increase in the oil price. So is that actually something which could relieve the Swiss inflation situation? Of course, if the oil price increases, this means that inflation also be they'll be a little bit higher. But of course, also the oil price also has an effect on on the economy. What we have seen so far, the increase in the oil price in the last days has only a very small effect on inflation. Back to the franc then. One tool that can be used in the past, the currency interventions to keep a lid on the franc. Did they are they still on the table now? Also with a US president, Donald Trump. The Swiss National Bank is ready to intervene in the FX market if necessary. I will repeat it is quite a lot in the last couple of months and this is still true. It's also important to say that we do not have an FX level in mind. We do not have an FX target. But the FX intervention interventions remain an important instrument that that we have. So Switzerland is not a currency manipulator. When we intervened in the FX market, it was to ensure appropriate monitor conditions to achieve our goal, which is price stability. However, during all of last year, all of 2024, you didn't intervene in a meaningful manner in that affects market at all. So are you scared of Trump? So we do monetary policy for Switzerland and there we have different instruments like the main instrument interest rates, but also FX interventions. And we use them and will also use them in the future to achieve our goal of price stability. You said today when we talk about the policy rate, you said today that you wouldn't go negative likely because of all those consequences that could have. However, if you don't want to go negative, then you basically have to intervene more in the exchange rate if the upward pressure on the franc stays. So doesn't that set you on a confrontation? Doesn't that set up a confrontation with Donald Trump? So, so far, uh, in the last one and a half years have lowered interest rates quite early and also decisively. And this means that at the moment the interest rate is expansionary. And this also has a positive effect, of course, on the on on inflation on the side. On the FX side, your right to intervene in the FX market that's necessary to achieve our goal, which is price stability. It is intentional that you're not mentioning the name of the US President I talk about Switzerland and the Swiss National Bank. I get it. All right, cool. Cool. So looking forward, like on July 9th, which is less than three weeks from today, the 90 day tariff reprieve, which Donald Trump has called for. And so that tariffs on Switzerland could ratchet up to 31% on that day. How much does that worry you for the Swiss economy? Of course, tariffs like this could have an impact on the Swiss economy, but it's it's very difficult to to see the exact amount because almost every enterprise is is is impacted differently. In Switzerland, uh, the Swiss National Bank is not in charge of negotiations. This is, of course, with the Confederation. And the Federal Council just ratified the mandate a few weeks ago. But still, you would have to react to the monetary conditions which politicians present you with. So do you think you might need to react very quickly after July 9th? We will see, uh, when this day comes. And do you think that you can reach your next scheduled decision in September without an unscheduled rate cut in between? How can you make a forecast in this? Sorry that I ask you for another forecasting question. How how likely do you think it is that you will go by the end of the year that you will have to go below zero? I will not do a forecast on this. We do monetary policy in every quarter at our at our assessments. There is a look at all the data and take a decision.
Mint
13-06-2025
- Business
- Mint
Australia shares log fifth weekly gain; Mideast tensions take some shine off
ASX 200 up for a fifth straight week Banks up for a fifth week Energy stocks highest since mid-Feb Gold stocks end at record level Australian shares wrapped up a fifth week of gains with declines on Friday after Israel's strikes on Iran dampened global risk sentiment. The S&P/ASX 200 index fell 0.2% to 8,547.40 points at the close. However, the benchmark was up about 0.6% for the week, marking a fifth straight weekly gain. Global markets slumped after Israel attacked Iran, as heightened geopolitical uncertainty caused investors to flee equities and find shelter in safe haven assets including gold and the Swiss Franc. a military strike on Iran's nuclear facilities and missile factories on Friday to prevent Tehran from building an atomic weapon. The United States said it had no part in the operation. Tim Waterer, chief market analyst at KCM Trade, said market anxiety intensified following the Israeli air strikes. "Traders were less inclined to take on new long positions today until we see how the situation in the Middle East plays out," Waterer said. The losses on the benchmark were led by a 0.4% fall in heavyweight financials. Despite Friday's losses, the index notched its fifth consecutive week of gains. The country's 'big four' banks shed 0.2%-0.7% on the day. Technology stocks fell 1.2%. In contrast, energy stocks jumped nearly 5%, hitting their highest since mid-February. The index rose for a third week due to surging oil prices on fears of supply disruptions due to Middle East tensions. Gold stocks advanced more than 4%, hitting a record close, as investors rushed to safe-havens amid the Israel-Iran conflict. New Zealand's benchmark S&P/NZX 50 index fell 0.8% to close at 12,552.87 points. (Reporting by Adwitiya Srivastava in Bengaluru; Editing by Sonia Cheema)
Bloomberg
09-06-2025
- Business
- Bloomberg
Negative Swiss Rates Send a Warning to Europe
As economists debate whether trade wars will stoke inflation as companies raise prices or produce disinflation by crimping growth, one country is already contending with the consequences of slowing inflation. Switzerland's annual rate dipped to minus 0.1% in May, which is likely to prompt the Swiss National Bank to cut its official policy rate by 25 basis points to zero at its June 19 meeting — with further cuts into negative territory a distinct possibility. The central bank has been clear about its determination to counteract the relentless appreciation of the Swiss franc — especially to the euro, the currency of the big economic zone that surrounds Switzerland. The US Treasury in its semi-annual review released Thursday, added Switzerland to its list of nine countries it monitors closely over foreign-exchange practices, but stopped short of accusing it of currency manipulation. SNB President Martin Schlegel has said that negative borrowing costs — which were in place from 2015 to 2022 — are an option, although 'no one likes' them. A monetary policy move below zero could come as soon as September, according to Bloomberg Intelligence.
Bloomberg
06-06-2025
- Business
- Bloomberg
SNB Denies FX Manipulation After US Treasury Puts Swiss on List
The Swiss National Bank denied being a currency manipulator after the US Treasury added Switzerland to a list of economies it is closely monitoring over foreign-exchange practices. 'The SNB does not engage in any manipulation of the Swiss franc,' it said in an emailed statement. 'It does not seek to prevent adjustments in the balance of trade or to gain unfair competitive advantages for the Swiss economy.'
