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SNB says current chances of negative interest rates are small

BY Reuters | ECONOMIC | 05:01 AM EST

BERN, Dec 12 (Reuters) - The Swiss National Bank could still take interest rates into negative territory, Chairman Martin Schlegel, although the likelihood of such a move has reduced after the central bank's latest cut in borrowing costs.

"At the current juncture we cannot exclude negative interests rates in the future," Schlegel told reporters. "I can also say that, as discussed today, the likelihood of negative interest rates has become small."

Schlegel, who has previously flagged negative rates as possible move, said the SNB did not like negative rates, a policy it used for seven years until 2022.

(Reporting by John Revill Editing by Dave Graham)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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