SNB's Zurbruegg says cbank ready to act to support economy if necessary

Sun Nov 11, 2012 5:27am EST
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ZURICH (Reuters) - The Swiss National Bank is prepared to take additional measures to protect the Swiss economy should a further slowdown make it necessary, a policymaker was quoted as saying on Sunday.

SNB board member Fritz Zurbruegg, however, did not specify what action the bank might take.

After investors flooded into the Swiss franc to seek refuge from the euro zone debt crisis, the SNB set a cap of 1.20 francs to the euro in September 2011 to safeguard the Swiss economy against deflation and recession.

Zurbruegg, who joined the SNB at the start of August, said there had been a general weakening of the global economy this year which had dragged on Switzerland's growth.

"Based on the IMF projections it can be supposed that the weakening of the Swiss economy has increased some more," Zurbruegg told the NZZ am Sonntag newspaper, adding that the risks to the Swiss economy were to the downside.

"If we see the danger that the situation is deteriorating and additional measures become necessary to achieve our monetary policy target, we will also do that," he said.

Switzerland's economy shrank unexpectedly in the second quarter as the crisis in the euro zone dampened demand for Swiss goods and services.

At its September policy meeting the SNB cut its 2012 growth forecast to 1 pct from 1.5 pct and kept its target range for the three-month Libor at 0.00-0.25 percent.

Asked whether it was a problem that ultra-low interest rates made it hard for pension funds to make returns on investments and could cause the housing market to overheat, Zurbruegg said there was no alternative to the SNB's policy.   Continued...

New appointed member of the Swiss National Bank (SNB) Fritz Zurbruegg attends a news conference after the weekly meeting of the Federal Council in Bern April 18, 2012. REUTERS/Pascal Lauener