SNB sees some upside in ECB easing

washington — Switzerland could benefit from further policy easing in the eurozone if the Swiss franc weakened in tandem with the euro against the US dollar, Swiss National Bank chairman Thomas Jordan said.

But Jordan warned the SNB would defend its currency cap against the euro and would not hesitate to take other measures if further stimulus from the European Central Bank pushed the franc up against the euro. ECB President Mario Draghi said earlier on Saturday the eurozone central bank will ease monetary policy further if the euro keeps strengthening, his strongest signal to date that the ECB may embark on stimulative asset purchases.

Jordan said it was hard to predict the impact of such policies on neighbouring Switzerland, but the SNB was determined to keep loose monetary conditions given continued low inflation.

“The euro is very strong against the dollar and a weakening of the euro in general is probably not too bad for the Swiss franc,” he said in an interview on the sidelines of International Monetary Fund spring meetings. “If the Swiss franc weakens with the euro together against the dollar, that would be some- thing which is beneficial for Switzerland and the Swiss economy.”

The SNB put a cap of 1.20 per euro on the soaring franc in 2011 to help stave off recession and the threat of deflation and had to intervene heavily in 2012 as the eurozone crisis flared. “The minimum exchange rate is the key tool so we will enforce it also in the future in order to maintain adequate monetary conditions in Switzerland,” Jordan said. —