Swiss National Bank Will Not Lightly Take Interest Rates Negative, Chairman Says

Swiss National Bank Considers Negative Interest Rates Move

ZURICH (Reuters) -Swiss National Bank Chairman Martin Schlegel has not ruled out taking the central bank's policy rate into negative territory if necessary, he said on Monday, although such a step would not be taken lightly.

"The SNB doesn't like negative interest rates, at the same time we can't rule negative interest rates out," Schlegel told broadcaster SRF in an interview.

Negative interest rates had been effective when previously used by the SNB, Schlegel said, although the central bank would only return to the policy if it was "really necessary."

"We have seen that negative interest rates have served their purpose," Schlegel said. "But is not something the SNB would do lightly."

Schlegel has frequently mentioned the possibility of negative rates in recent weeks, especially as Swiss inflation has ebbed lower, reaching 0.6% in December and raising concerns of negative inflation.

Markets currently give a 64% chance the SNB will respond by cutting borrowing costs from the current 0.5% level to 0.25% in March, with a 27% likelihood that rates will reach 0% after the central bank's decision in June.

Schlegel declined to comment on future interest rate moves, adding that low inflation was not a problem for the central bank.

"It is possible that we will be individual months with negative inflation, but that is not a problem," Schlegel said.

"Our concept is price stability over the mid term," added Schlegel, referring to the SNB's goal of inflation in the range of 0%-2%.

(Reporting by John RevillEditing by Tomasz Janowski and Bill Berkrot)