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The subject of the Jordan’s exit after 12 years leading the central bank was hardly broached at a press conference in Zurich to discuss the SNB’s latest interest rates decision.Still, with the pressure off after his 42nd monetary policy meeting delivered the SNB’s third rate cut this year, Jordan allowed himself to relax a little and passed more questions to Schlegel, who takes charge on Tuesday.Schlegel, who joined the SNB in 2003 and has been described in the Swiss media as like a stepson to Jordan, described his departure as the end of an era, but pledged no big changes in policy.”Our mandate is price stability, and this will remain our mandate,” Schlegel told Reuters in an interview on Thursday. “This is also our priority at the Swiss National Bank.” Price stability – defined as inflation within a range of 0-2% – has been the key target for Jordan during his leadership, and has been achieved over the last 15 months as the SNB hiked interest rates and allowed the appreciation of the Swiss franc keep the price of imports in check.Observers have wondered if the change in leadership at the SNB could lead to a change of style, with Jordan seen as the dominant force leading the bank through the scrapping of its minimum exchange rate against the euro and the crash of Credit Suisse.”I think the important question is what will be the same,” said Schlegel when asked how his approach may differ from Jordan, who was his first boss at the SNB.”And the same will be the mandate and the focus on price stability.”After more than 20 years at the SNB, the 48-year-old from Zurich said he was ready for the challenge. “This will be my eighth position at the SNB, and I was always open to new things and new challenges,” he said. “This was the way I progressed steadily.”And also a bit of luck is also helpful,” he added. More

The Swiss National Bank on Thursday took a third step to loosen monetary policy this year, bringing its key interest rate down by 25 basis points to 1.0%.
The reduction comes amid subdued domestic inflation and a rally in the Swiss franc.
It was the first major Western central bank to reduce interest rates back in March.

A view of the headquarters of the Swiss National Bank (SNB), before a press conference in Zurich, Switzerland, March 21, 2024. 
Denis Balibouse | Reuters

The Swiss National Bank on Thursday took a third step to loosen monetary policy this year, bringing its key interest rate down by 25 basis points to 1.0%.
The trim, which had been anticipated by 30 of 32 analysts surveyed in a Reuters poll, marked the SNB’s third interest rate reduction of 2024.

It was the first major Western central bank to reduce interest rates back in March.
The third trim comes amid similar signals from the European Central Bank and the U.S. Federal Reserve, which took the long-awaited plunge to slim down its interest rates with a 50-basis-point cut last week. Domestically, Swiss inflation remains subdued, with the latest headline print pointing to a 1.1% annual increase in August.
The Swiss franc gained ground against major currencies on the back of the latest interest rate decision. The U.S. dollar and euro were down nearly 0.14% and 0.16% against the Swiss coin, respectively — meeting ING analysts’ expectations that the cut would lead to “outperformance” of the Swiss currency.
The strengthening of the Swiss currency in August prompted one of the country’s largest associations, the technology manufacturers’ group Swissmem to entreat the SNB to “act soon, in line with its mandate” and ease pressures constraining local businesses.
“This renewed exacerbation has come at a sensitive time for one of the key export industries: following a tough period of over a year, a slow recovery was in sight. If the upside pressure cannot be contained, these hopes will dissipate,” Swissmem said at the time.

The SNB acknowledged the broader trend of its currency rally as a key contributor to the Thursday reduction.
“Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter. Among other things, this decrease reflects the appreciation of the Swiss franc over the last three months,” it said in a statement.
“The SNB’s easing of monetary policy today takes the reduction in inflationary pressure into account. Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term,” it added.
“The SNB has consistently been behind the curve on its inflation forecasts this year, even as it has conditioned them on lower rates each time. The 0.6% forecast for 2025 is likely a bit too close for comfort for a central bank keen to return to deflation,” said Kyle Chapman, FX markets analyst at Ballinger Group.
“I expect another two 25bp moves in December and March at the very least, primarily because I don’t see any near-term sources of depreciation for the franc without a stronger stance on intervention from the SNB. We are heading back towards zero relatively quickly,” Chapman added. 
SNB Chairman Thomas Jordan, who is leaving the central bank at the end of this month, talked down this risk on Thursday.
“If you look at our inflation forecast, this is still within the range of price stability, so I cannot see any risk of deflation soon,” Jordan told reporters, according to Reuters. He added that the central bank may nevertheless have to reduce rates again to retain inflation in the 0-2% target range.
Adrian Prettejohn, Europe economist at Capital Economics, said that the SNB communique suggested that the central bank’s policymakers have likely not used forex interventions “to a significant extent” — but may soon resort to such measures.
“We think the SNB will start to consider using FX interventions significantly once the policy rate falls to around 0.5%. At that point it will be a more finely balanced decision as to how much to rely on currency intervention rather than further rate cuts to provide further monetary policy support,” Prettejohn said in a note. More

ZURICH (Reuters) -The Swiss National Bank reduced interest rates by 25 basis points on Thursday, echoing steps to lower borrowing costs by the European Central Bank and U.S. Federal Reserve, and left the door wide open for more rate cuts as inflation cools sharply.The SNB cut its policy rate to 1.00%, the lowest level since early 2023, as expected by analysts in a Reuters poll. The cut was its third such reduction this year as the central bank dialled back measures designed to combat inflation.The decision, the last in the 12-year tenure of SNB Chairman Thomas Jordan, was enabled by the taming of price rises in Switzerland – which slowed to 1.1% in August and has been within the central bank’s 0-2% target range for the last 15 months.The SNB is ready to cut interest rates again, Jordan said after the decision, noting that inflationary pressure in Switzerland had decreased significantly.”Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term,” he told a press conference after his 42nd and last monetary policy meeting.His successor Martin Schlegel said the SNB’s view that inflation was likely to fall further meant further cuts were likely, although he did not give any guarantees.”It’s important to know that we don’t give forward guidance and we never pre commit, but if you look at monetary conditions, the situation now, it’s not unlikely that we also cut in December,” Schlegel told Reuters in an interview.The current SNB Vice Chairman, who takes charge of the central bank on Tuesday, did not give guidance on possible moves in the more distant future.The SNB’s success in fighting inflation has enabled it to become the frontrunner among central banks in lowering borrowing costs, cutting rates in both March and June.Schlegel said decision to cut rates again was helped by weaker inflationary pressure in Switzerland, with the SNB slashing its inflation forecasts for 2025 and 2026 and predicting consumer price growth of 0.6% in the second quarter of 2027.He also highlighted the rise in the value of the Swiss franc as a contributor to low inflation and acknowledged the difficulties the safe haven currency caused for Swiss exporters already facing weak demand from abroadThe franc has appreciated in recent weeks, hitting its highest level in nine years against the euro in early August.It strengthened after the 25-basis-point cut, which followed similar monetary policy easing by the ECB and the Fed earlier this month, was announced.Charlotte de Montpellier, senior economist at ING, said the SNB’s 25 point reduction was “the most dovish you could ask for.” “Not only is the SNB making it very clear that further rate cuts may be necessary, but it has also revised its inflation forecasts very sharply downwards, and much more sharply than expected,” she said.CUTS ON THE WAYKarsten Junius, chief economist at J Safra Sarasin, saw the bank’s outlook as more dovish than markets expected.”This is the strongest hint towards future policy decisions that the SNB has given in the past years and a break from previous communication patterns,” he said.The SNB trimmed its 2024 inflation forecast to 1.2% from its 1.3% prediction in June. It also cut its forecasts for 2025 to 0.6% from 1.1% previously and for 2026 to 0.7% from 1.0%.”With inflation now expected to average 0.6% in 2025 and 0.7% in 2027, the SNB seems to want to send a very clear signal to the markets that further rate cuts are on the way, in order to weaken the Swiss franc,” said de Montpellier at ING. More

As part of the package, the Ministry of Finance (MOF) plans to issue 1 trillion yuan of special sovereign debt primarily to stimulate consumption amid growing concerns about a stuttering post-COVID economic recovery, said the sources.Part of the MOF proceeds raised via special bonds, which are floated for a specific purpose, will be used to increase subsidies for the trade-in and renewal of consumer goods and for the upgrade of large-scale business equipment, said the two sources.The proceeds will also be used to provide a monthly allowance of about 800 yuan, or $114, per child to all households with two or more children, excluding the first child, the first source said.China also aims to raise another 1 trillion yuan via a separate special sovereign debt issuance and plans to use the proceeds to help local governments tackle their debt problems, the source added.Most of China’s fiscal stimulus still goes into investment, but returns are dwindling and the spending has saddled local governments with $13 trillion in debt. China’s household spending is less than 40% of GDP, some 20 percentage points below the global average.Some of the fiscal support measures could be unveiled as soon as this week, said the sources, who declined to be named as they were not authorised to speak to media.China’s State Council Information Office, which handles media queries on behalf of the government, and the MOF did not immediately respond to requests for comment.GROWTH TARGET IN FOCUSChinese leaders pledged on Thursday to push to hit the 2024 economic growth target of roughly 5% and stop declines in the housing market, state media reported, citing a Politburo meeting.The Politburo said the country would make good use of its ultra-long special sovereign bonds and local government special bonds to support government investment and necessary fiscal spending should be guaranteed.The planned fiscal expansion is the latest attempt by Chinese policymakers to revive an economy grappling with deflationary pressures and in danger of missing this year’s growth target due to a sharp property downturn and frail consumer confidence.It would also come after the central bank on Tuesday announced broader-than-expected monetary stimulus and property market support measures to restore confidence in the economy with key measures including liquidity injections and lower borrowing costs.The measures have lifted market sentiment, but mainly because they raised expectations authorities will follow soon with a fiscal package to complement the monetary and financial measures.Under the guidance of the top leadership, the MOF, along with several government bodies, has in recent weeks been working on fiscal stimulus measures to revive the economy, said the two sources.In addition to the special sovereign debt issuance to support consumption, Chinese authorities also plan to ramp up financial support for small and medium-sized enterprises in phases, such as employment subsidies and tax and fee relief, to reduce their operating costs, the second source said.”We expect more fiscal support for housing and social welfare spending in the next few months. In our view, it’s not a ‘whatever it takes’ moment, but it definitely shows that Beijing is taking deflation seriously and exploring all options,” Morgan Stanley economists led by Robin Xing said in a research note on Thursday.Bloomberg News reported on Thursday that China is also considering the injection up to 1 trillion yuan of capital into its biggest state banks to increase their capacity to support the struggling economy, primarily by issuing new special sovereign bonds. More

NEW YORK (Reuters) – The global financial architecture needs a permanent mechanism for restructuring sovereign debt, as measures currently in place have fallen short for creditors and borrowers alike, the head of the U.N. Trade and Development agency told Reuters.A raft of recent defaults from Zambia to Ethiopia have fuelled a debate about how to ensure that countries in distress can achieve a swift and smooth debt restructuring that would help them return to a path of growth and rising investment. “What has happened is that there are ad-hoc mechanisms put in place when the problem comes, (but) there is no permanent institution or system that is there all the time dealing with debt restructuring,” UNCTAD Secretary-General Rebeca Grynspan said on the sidelines of the U.N. General Assembly in New York.Talk of a sovereign debt restructuring mechanism is not new. The International Monetary Fund (IMF) spearheaded a push in the early 2000s but that did not gain traction, Grynspan said. “Maybe we can create new momentum to take this question seriously.”Efforts to reshape the global debt infrastructure have not been met with urgency, partly because the emerging markets sovereign bond market has of late been resilient.Yet two in five developing economies are at some level of debt distress. Debt-servicing costs are estimated to hit $400 billion this year and over 3 billion people live in countries that spend more on debt servicing than on education or health.Debt sustainability assessments should not only focus on the capacity to pay, but also the capacity to grow, Grynspan said.NO LEARNING CURVE Some advances have been made, especially in 2014 with the addition of collective action clauses (CACs) – making it much harder for holdout investors to push for bigger gains and prolong the debt rework – which have sharply cut the time a country remains in default.”It is important to maintain the collective clauses and see how they have worked and how we can improve them,” she said, but every case is a specific fix, and there is “no learning curve.””It will be important for the countries that have gone through the process to establish a dialog with all the countries that may face a debt restructuring,” she said, adding more rules of the game would increase overall transparency.The Common Framework, a 2020 initiative of the Group of 20 to streamline debt restructurings, created frustrations for creditors and borrowers. Only four countries have signed up for it.Grynspan said she was critical of the Common Framework, and pointed to the length of time it took to put together deals for Zambia and Ghana.”You have 40% of the developing countries in debt distress, and that happened because of systemic shocks which are more and more common. If it takes you three or four years for three countries, imagine if you have 10.” More