* SNB says economic downturn in Switzerland not as bad as expected
* SNB remains committed to negative rates, currency interventions
* SNB will publish more detail on currency interventions
* Disclosure could be intended to stop currency manipulator label (recasts, adding chairman comment, analyst reaction)
ZURICH, Sept 24 (Reuters) - The Swiss National Bank is ready to buy more foreign currency, it said on Thursday, citing global political risks which could heap appreciation pressure on the safe-haven franc and stall Switzerland’s post-coronavirus economic recovery.
The central bank will continue its twin-track approach of currency market interventions and low interest rates which had checked the rise of the franc this year, Chairman Thomas Jordan said.
“The franc remains highly valued, that’s why we remain ready to intervene more strongly in the currency markets,” Jordan said.
The SNB kept its policy interest rate and the interest rate it charges on sight deposits locked at minus 0.75% as expected by all economists in a Reuters poll.
It expected the coronavirus epidemic to hit the Swiss economy less severely than previously feared, and is now forecasting a 5% contraction this year.
Still, the situation remains highly uncertain, which could encourage investors to buy up the franc again.
“There are a number of risks that could cause setbacks again and again, for example, the second wave could occur in a pandemic, which could lead to lockdowns, depending on the circumstances, which could hamper recovery,” Jordan told reporters.
“We also have political risks. The U.S. elections are coming up, we have the Brexit with great uncertainty and also the trade conflict between America and China.”
Jordan said now was not the time for the SNB to ditch its expansionary approach.
“It’s important to see that the outlook has not fundamentally changed,” Jordan said. “There’s a bit higher growth in 2020, but the situation remains severe.
“The recession in Switzerland is the biggest since the mid-1970s, there’s a sharp increase in unemployment and huge uncertainty about the economy, so for us it means that we have to continue with our expansionary monetary policy.”
Despite inflation at the bottom of its 0% to 2% target range, Jordan said the SNB would not review its policy framework. The U.S. Federal Reserve recently shifted its stance by saying it would tolerate higher inflation in exchange for higher economic growth.
The SNB said it would provide additional data on money market operations and publish the volume of foreign exchange interventions more often.
Analysts said the disclosures could be an attempt to reinforce the impact of the SNB’s foreign currency purchases.
“At the same time, however, it cannot be ruled out that this decision is linked to the fact that Switzerland is on the watch list of the U.S. authorities for currency manipulation; and that this additional transparency is intended to allay American fears,” said Charlotte de Montpellier, an economist at ING Bank. (Reporting by John Revill and Silke Koltrowitz; Editing by Michael Shields and Hugh Lawson)
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