SNB chairman says further interest rate cuts could be necessary
Adds detail, background throughout
CHAM, Switzerland, Oct 29 (Reuters) -The Swiss National Bank could further cut interest rates to maintain price stability, Chairman Martin Schlegel said on Tuesday.
"In the coming quarters, further interest rate reductions could be needed to maintain price stability in the mid-term," Schlegel told an event organised by Raiffeisen Bank in Cham, Switzerland.
The comments could be seen as the latest hint that the SNB will reduce rates at its next meeting in December.
The SNB has been at the forefront of interest rate cuts this year, lowering borrowing costs three times in 2024 to 1%. Markets currently have a 72% probability for a 25 basis point cut, and a 28% probability for a 50 basis point cut in December.
The cuts have been made possible by a downturn in Swiss inflation, which in September eased to 0.8%, its lowest level in more than three years.
The reading was well within the 0-2% range which the SNB targets under its goal for price stability.
Schlegel emphasized the importance of the price stability goal, saying it was a precondition for prosperity and growth.
"The good news is that our inflation forecasts show inflation in the area of price stability in the long term," Schlegel said, pointing to SNB forecasts for average inflation rates of 1.2% in 2024, 0.6% in 2025 and 0.7% in 2026.
Schlegel and SNB Vice Chairman Antoine Martin have both hinted in recent weeks that the SNB could consider negative interest rates to make the safe haven Swiss franc, whose strength has hurt exporters, less attractive to investors.
Reporting by John Revill
Editing by Dave Graham
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