ZURICH, Aug 29 (Reuters) - The Swiss National Bank watches the Swiss franc-euro exchange rate closely as neither a return of deflation nor, in the longer run, inflationary risks can be ruled out, its vice-chairman was quoted as saying on Sunday.
'We watch the situation very closely. We do not have a target for the exchange rate but strong and abrupt changes in the exchange rate have an important influence on the economy and prices,' Thomas Jordan told Swiss weekly newspaper SonntagsZeitung.
At its last monetary policy meeting in June, the central bank dropped its pledge to counter an excessive rise of the Swiss franc, which has gained more than 10 percent against the euro this year.
The franc's appreciation has picked up speed since the SNB stopped selling francs for euros in June and the Swissie hit a fresh record high against the euro on Wednesday at 1.2968.
'The monetary policy situation is very complex at the moment. On the one hand, there is a slight short-term risk that we see the return of a deflationary scenario,' Jordan said.
'On the other hand, inflation could rise to more than 2 percent in the longer run if we do not rectify our expansionary monetary policy in time.'
SNB head Philipp Hildebrand recently warned against raising rates too early. He also said, the central bank would take action if deflation risks resurfaced.
The SNB is generally expected to leave rates unchanged at rock bottom levels at its next monetary policy meeting on September 16.
In the interview with SonntagsZeitung, Jordan also cautioned against the danger of a real estate bubble in Switzerland. 'The risk is there even though, for the time being, only certain segments and regions show signs of overheating,' he said.
(Reporting by Silke Koltrowitz; Editing by Ron Popeski) Keywords: SWISS SNB/JORDAN (Zurich Newsroom +41 58 306 7336, fax +41 44 251 0476, zurich.newsroom@news.reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
'We watch the situation very closely. We do not have a target for the exchange rate but strong and abrupt changes in the exchange rate have an important influence on the economy and prices,' Thomas Jordan told Swiss weekly newspaper SonntagsZeitung.
At its last monetary policy meeting in June, the central bank dropped its pledge to counter an excessive rise of the Swiss franc, which has gained more than 10 percent against the euro this year.
The franc's appreciation has picked up speed since the SNB stopped selling francs for euros in June and the Swissie hit a fresh record high against the euro on Wednesday at 1.2968.
'The monetary policy situation is very complex at the moment. On the one hand, there is a slight short-term risk that we see the return of a deflationary scenario,' Jordan said.
'On the other hand, inflation could rise to more than 2 percent in the longer run if we do not rectify our expansionary monetary policy in time.'
SNB head Philipp Hildebrand recently warned against raising rates too early. He also said, the central bank would take action if deflation risks resurfaced.
The SNB is generally expected to leave rates unchanged at rock bottom levels at its next monetary policy meeting on September 16.
In the interview with SonntagsZeitung, Jordan also cautioned against the danger of a real estate bubble in Switzerland. 'The risk is there even though, for the time being, only certain segments and regions show signs of overheating,' he said.
(Reporting by Silke Koltrowitz; Editing by Ron Popeski) Keywords: SWISS SNB/JORDAN (Zurich Newsroom +41 58 306 7336, fax +41 44 251 0476, zurich.newsroom@news.reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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