SWITZERLAND’S central bank sees a low risk of a negative price and wage spiral and is hopeful that a recent “slight” depreciation in the currency will continue, the head of the Swiss National Bank (SNB) said Saturday.

    In an interview on the sidelines of International Monetary Fund meetings in Lima, SNB chairman Thomas Jordan repeated a pledge to keep interest rates in negative territory and intervene in currency markets if needed.

    Switzerland is wrestling with falling consumer prices, weak economic growth and a strong currency after the SNB in January abruptly abandoned its cap of 1.20 francs per euro. The franc is now trading around 1.09 per euro.

    “We saw a certain depreciation of the franc but the Swiss franc remains overvalued, significantly overvalued, and of course this creates a difficult situation for the Swiss economy,” Jordan said.

    “We have negative interest rates and we have also the readiness to intervene in foreign exchange markets if necessary, and both should contribute to a further weakening of the Swiss franc.”

    Consumer prices fell 1.4 percent in the year through September but Jordan said the chance of a negative downward spiral in wages and prices was limited.

    Jordan declined to say whether the SNB had intervened on currency markets since its last foray into the markets in late June.(SD-Agencies)