Ready to have you believe him again.
The above is the only reasonable conclusion one can draw from Swiss National Bank chief Thomas Jordan’s vow that “negative interest will not become the ‘new normal.’” Because the last time the SNB promised not to do something—eliminate the franc’s euro cap—it went ahead and did it a month later. And in doing that thing, created the need for the current negative 75 basis point interest rate.
Mr. Jordan said low interest rates around the world had created an extremely difficult environment for the Swiss economy, a situation that is exacerbated by a Swiss franc that is “significantly overvalued.” The situation required the central bank to begin applying negative interest rates in January, a move designed to curb demand for the franc, he said.
Mr. Jordan said negative interest rates will play “a very important role” until upward pressure on the franc eases and the global economy recovers further.
Swiss Central Bank Says Negative Rates Won’t Become ‘New Normal’ [WSJ Real Time Economics blog]
SNB Jordan Says Franc ‘Overvalued,’ Threatens Interventions [Bloomberg]