The Swiss National Bank (SNBN) scrapped its minimum exchange rate today, abandoning a tool policy makers said just days ago was necessary to ward off deflation.<\/span><\/h2>\n![\"_swiss-national-bank\"](\"http:\/\/www.resources-roots.com\/wp-content\/uploads\/2015\/01\/5bf35_swiss-national-bank-e1421326979511.jpg\")
The central bank ended its three-year-old cap of 1.20 franc per euro and reduced the interest rate on sight deposits, deepening a cut announced in December. The latest move marks an attempt by the SNB to reinforce defenses before government bond purchases by the European Central Bank.<\/p>\n
The change comes just one week before ECB policy makers meet to discuss introducing new stimulus, including quantitative easing, a move that may add to pressure on the franc against the euro. As a small, export-oriented economy with a big banking sector, Switzerland has repeatedly grappled with how to rein in a currency popular with investors at times of crisis.<\/p>\n
The central bank has already spent billions defending the cap after introducing it in September 2011. SNB Vice President Jean-Pierre Danthine said in comments broadcast Jan. 13 that the 1.20 ceiling would remain a \u201cpillar\u201d of monetary policy, while on Jan. 5 President Thomas Jordan termed it \u201cabsolutely central.\u201d<\/p>\n
Not one of 22 economists surveyed by Bloomberg News between Jan. 9 and Jan. 14 expected the SNB to get rid of its cap in 2015. Only four saw it abandoning the measures next year.<\/p>\n
On Dec. 18, the SNB announced the introduction of a negative deposit rate of minus 0.25 percent to supplement its franc ceiling, citing the need to stem a tide of money flowing from Russia\u2019s financial crisis. The measure was to take effect on Jan. 22, the day of the ECB\u2019s next policy decision.<\/p>\n
\u201cThe SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified,\u201d it said in a statement today.<\/p>\n
Source:<\/p>\n
http:\/\/www.bloomberg.com\/news\/2015-01-15\/snb-unexpectedly-gives-up-cap-on-franc-lowers-deposit-rate.html<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
The Swiss National Bank (SNBN) scrapped its minimum exchange rate today, abandoning a tool policy makers said just days ago was necessary to ward off deflation. The central bank ended its three-year-old cap of 1.20 franc per euro and reduced the interest rate on sight deposits, deepening a cut announced in December. The latest […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1,22],"tags":[32],"yoast_head":"\n
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