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SNB chairman aware of 'undesirable' effects of negative rates

BY Reuters | ECONOMIC | 06/19/25 04:00 AM EDT

ZURICH, June 19 (Reuters) - The Swiss National Bank is aware of the "undesirable side effects" of negative interest rates, Chairman Martin Schlegel said on Thursday, although the measure had been an important instrument when deployed in the past.

"Between 2015 and 2022 negative interest was an important instrument for maintaining price stability in Switzerland in an exceptional phase," Schlegel said in a speech after the SNB's latest interest rate decision.

"However, we are also aware that negative interest can have undesirable side-effects and presents challenges for many economic agents," he added, after the central bank reduced its policy rate to 0%.

(Reporting by John Revill, editing by Rachel More)

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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.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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