SNB Faces Trade-Off Between Tools to Tame Franc, Hildebrand Says

(Bloomberg) — Swiss National Bank officials will use all available tools to achieve their aims but it’s not clear how far they will need to lean on interest-rate cuts, according to former President Philipp Hildebrand.

The vice chairman of Blackrock Inc. told Bloomberg Television’s Francine Lacqua in Davos that the SNB has at times used “very unconventional instruments” to move Swiss inflation in the desired direction. This made it one of the most successful central banks in fulfilling its mandate, he added.

“I’m convinced that they will continue to deploy all the instruments that they have in their arsenal in order to basically continue to fulfill the mandate,” Hildebrand said. “The currency, obviously, is a big factor in all of this, and so we’ll see to what extent they balance potential currency instruments versus interest-rate instruments.”

The use of largescale interventions led to Switzerland being branded a foreign-exchange manipulator by the US Treasury when Donald Trump was last in power as president. Policymakers’ renewed use of that tool could expose them to the risk of being classified that way again under his new administration.

–With assistance from Levin Stamm.

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