The Fed has surprisingly cut interest rates. This step also brings the SNB is under pressure to act?
I can't imagine. The starting conditions are other. The American Central Bank has not failed, at the end of the cycle, to raise interest rates and has established game room. The SNB is sticking for five years to the negative interest rates and has rooms little game. Maybe you can do something symbolic, but an effective reduction in interest rates, they can not perform.

What would bring a symbolic interest rate step?
at The Moment is a lot of uncertainty is palpable. The Embassy of the Central banks is to say: We care, we support. If there were serious problems, for example, in the financial system, we would be there. All of this helps to reduce the uncertainty. A symbolic rate cut would also fit into the Arsenal. But whether the anything is brings and significant influence, is questionable. We have to be realistic. The SNB can't do as much, because the starting point is located at a key rate of minus 0.75 per cent – and not at a positive interest rate in the United States.

What would be the consequences of a reduction in interest rates?
the lower the interest, the less you can expect the bonds to yield and the more uncertain other investments such as stocks are, the more pension funds and insurers will rely on a real estate. In the medium term gives us the problem: The really big economic crises, bubbles occur almost every second Time from the bursting of the real estate. In this respect, we had the Chance to absorb with a rate cut, the immediate impact of the Coronavirus-crisis, but we would be letting ourselves in order for a major system stability risk. Because if it hooks on the real estate market, it is in consequence of the banks is very bad.

"That would meet us in Switzerland hard, because we have a very export-oriented economy."

Could prevent the SNB cut interest rates in a recession?
The Coronavirus crisis has the potential to be a world recession. The would meet us in Switzerland hard, because we have a very export-oriented economy. But against the limitations and uncertainty on the part of consumers, monetary policy cannot do much about it. You can reduce a bit of uncertainty. But when rates are half or a quarter of a percent lower, we do not change our behavior directly. Here it comes to life and much more important things than the economy.

What, then, is for the SNB is still possible?
The SNB feels likely to be forced to be on the exchange rate page is still alert. Since the game rooms are still larger than in the case of the interest rates. She has also intervened in recent weeks, quite significantly on the foreign exchange market, and I think we have to assume that will continue.

Has the SNB intervention actually still room? The balance sheet is already huge, and the SNB would run the risk, again on the Watchlist by the Americans to come into allegations of foreign exchange market interventions?
theoretically, you could make the balance sheet is infinitely large. But if we take Thomas Jordan seriously, we must assume that the SNB, the upper limit is already exceeded. He has at 15. January, 2015 the lifting of the exchange rate limit based on the grounds that the Board has concern that the SNB's balance sheet has grown to about the foreign exchange market interventions sharply and it is difficult manageable risks. If Mr. Jordan has not changed its assessment in principle, the SNB, in an area that is uncomfortable. The balance sheet has grown since 2015 is still quite huge of.

How do you see the development of the franc exchange rate?
I do not think that the Swiss franc will increase purely as a response to the step of the Fed. There is no empirical Basis for this is that the interest rate differential determines the exchange rate. The Americans have raised interest rates in recent years and since the end of 2018, reduced – and that has had on the exchange rate will have no effect. This is a story from the textbooks of Economics, told students at the bachelor's level – with a reality that has little to do. Also in the exchange rate to the Euro, the interest rate differential plays no role. Generally speaking, however, I believe that in the current environment, with a high degree of uncertainty, the Swiss franc more of a tendency to strength of will. The will, the SNB has certainly continued. In this respect, I think that the development of the Euro-Swiss franc exchange rate is likely to remain undramatic.

Created: 04.03.2020, 14:59 PM