By John Revill
ZURICH (Reuters) -The Swiss National Bank is ready to intervene in the foreign currency markets and cut interest rates even below zero to prevent inflation falling below its price stability target, Chairman Martin Schlegel said on Tuesday.
Swiss inflation fell to 0% in April, its lowest level in four years, government data showed on Monday, at the bottom end of the SNB’s 0-2% target range.
The reading fueled expectations the SNB will cut rates from the current 0.25% at its next policy meeting on June 19, while markets expect rates could go below zero later in the year.
Schlegel said the SNB had expected inflation to come down, and it would now be “interesting” what the central bank would decide.
“No one likes these negative interest rates, obviously the Swiss National Bank doesn’t like it,” Schlegel said at an event in Zurich.
“But if we have to do it, the negative interest rates, we’re certainly prepared to do it again,” he added.
Schlegel acknowledged current market uncertainties, but said price stability remained the SNB’s key priority.
“We are to stay committed to our mandate, regardless of what happens,” Schlegel said.
The central bank was also prepared to intervene in the foreign currency markets to weaken the Swiss franc, whose appreciation contributes to low inflation by making imports cheaper.
Schlegel noted that the safe-haven currency had become stronger in the last couple of weeks, creating another problem for Swiss exporters wrestling with lower demand abroad and economic uncertainties.
“For the last couple of quarters, we have always said we are ready to intervene in the forex market if it’s necessary,” Schlegel said.
(Reporting by John Revill, editing by Ariane Luthi and Bernadette Baum)
