SNB Chairman Thomas Jordan said today that recent surge in EUR/CHF just represents “a reduction in the significant overvaluation” of the Swiss Franc. But he maintained that “our currency nevertheless remains highly valued”. And he maintained that SNB should continue with an expansionary monetary policy with negative interest rate. In addition, “our continued willingness to intervene in the foreign exchange market as necessary”.

Jordan further explained that “both instruments remain essential as the situation is still fragile. While the foreign exchange market has largely shrugged off recent equity market turbulence, circumstances in the financial markets – and thus by extension monetary conditions for the economy – could rapidly deteriorate again.”

Also, he pointed out that “inflation remains low and inflationary pressure is modest despite our expansionary monetary policy. Tightening monetary conditions would be premature at this juncture, and would risk unnecessarily jeopardizing the positive economic momentum that has been established.”

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