The market’s reaction was expected and also what the central bank wanted to achieve with the action, then the Swiss franc has appreciated to problematic levels as investors seek safe havens in the troubled financial market.
– In the short term, this gives the central bank some breathing space, says Geoffrey Yu, currency strategist at large bank UBS, told Reuters.
The negative rate applies to deposits of over 10 million francs .
The Swiss central bank also adjusts its benchmarks for the three month bank to a range between -0.75 and 0.25 percent.
The franc has recently moved closer to the central bank’s ceiling of 1: 20 francs per euro, since more people have begun to rely on quantitative easing from the European Central Bank in the near future.
The ceiling for Swiss franc was introduced in 2011, when the currency had almost reached parity with euro in the shadow of the debt crisis in southern Europe.
The Swiss government also cut its growth forecast for 2015 to 2.1 percent, against the previous 2.4 percent. The growth forecast for 2016 is 2.4 percent.
Inflation is expected be at 0.2 percent next year and accelerate to 0.4 percent in 2016.
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