The anticipated strengthening in the global recovery will have a supportive effect. Negative interest rates I would now like to turn to negative interest rates. Following the interest rate reductions since the last monetary policy assessment, the reference interest rate is now negative for the first time in the history of the SNB. This situation is new, and has therefore been discussed in detail in the public arena. I would like to emphasise that lowering the interest on sight deposits at the SNB into negative territory is a necessary monetary policy measure. Negative interest makes holding investments in Swiss francs less attractive for Swiss and foreign investors. This creates incentives to reduce inflows to the franc, and reinvest Switzerland’s traditional current account surplus abroad. Negative interest thus contributes to a weakening of the Swiss franc. The interest rate reductions had a rapid effect. As expected, the negative interest rate imposed on banks by the SNB was transmitted to the entire spectrum of money and capital market interest rates. However, low or negative interest rates are not limited to Switzerland. Low interest rates are a global phenomenon and some other countries, especially in the euro area, also have negative rates. Switzerland cannot disassociate itself from such developments. With the interest rate reduction in Switzerland, the interest rate differential to the major currency areas, which had declined to virtually zero in recent years, has now increased again.
Thomas Jordan: The Swiss National Bank’s monetary policy decision and assessment of the economic situation Introductory remarks by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Zurich, 19 March 2015. *  *  *  Ladies and gentlemen It gives me great pleasure to welcome you to this news conference. Following the discontinuation of the minimum exchange rate, we have decided to hold an extraordinary news conference at our quarterly assessment in March, in addition to the traditional six-monthly news conferences which will take place in June and December. In my presentation, I will explain the Governing Board’s monetary policy decision and outline our assessment of the economic situation. Afterwards, my colleagues and I will be at your disposal to answer questions. Monetary policy decision I will begin with our monetary policy decision. The SNB has decided to leave the target range for the three-month Libor unchanged at between –1.25% and –0.25%. Interest on sight deposits at the SNB remains at –0.75% and the exemption thresholds remain unchanged. Negative interest helps to make it less attractive to hold investments in Swiss francs. Overall, the Swiss franc is significantly overvalued and should continue to weaken over time. The SNB will continue to take account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy. It will therefore remain active in the foreign exchange market, as necessary, in order to influence monetary conditions.