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Swiss Central Bank will start negative interest rates from 22/01/2015

Switzerland's central bank announced on 18 December that it will introduce negative interest rates, a move designed to curb demand for the Swiss franc.

Negative interest rates begin

Beginning on 22 January 2015, the Swiss National Bank will charge banks 0.25% to deposit overnight funds with it, the central bank said in a statement. The move will push the three-month Libor rate into negative territory.

The SNB have indicated that the range for three-month Libor, a key interest rate, will be widened to -0.75% to 0.25%, from the current 0.0% to 0.25%.

SNB strategy

Negative interest rates are part of measures designed to prevent the franc from strengthening beyond 1.20 per euro, a level the SNB has committed to defending. On the announcement the Swiss franc fell 0.5% to 1.2075 per euro on the news.

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