Rates right for now but SNB eyeing mortgage mkt-Jordan

* Jordan says SNB still against excessive franc rise-paper

* SNB’s Jordan says looking at mortgage market closely

* SNB has means to withdraw liquidity if needed-Jordan

ZURICH, April 25 (BestGrowthStock) – Swiss interest rates are now at
the right level but if they remain ultra-low they could lead to
market distortions, especially in real estate, the vice chairman
of the Swiss National bank was quoted as saying.

“At the moment, the interest rate level is correct,” Vice
Chairman Thomas Jordan told the Swiss newspaper Sonntag on
Sunday. “However, if interest rates stay so low for a prolonged
period markets could experience distortions — especially in the
real estate and mortgage market. We’re looking at that closely.”

Switzerland’s central bank cut its benchmark interest rate
to 0.25 percent in March 2009 to help fight the worst recession
in decades. Although rates are still at rock-bottom, Switzerland
has exited recession and since March 2010 the central bank has
warned that ultra-low rates could lead to a housing bubble.

Several economists predict the SNB may raise interest rates
later this year.

Swiss mortgage lending and lines of credit to private
households rose during the financial crisis, in stark contrast
to the euro zone.

“In international comparison, we see a reasonable
development in our real estate prices,” Jordan also said.


The SNB also adopted currency interventions to prevent the
Swiss franc from appreciating too much against the euro, to
fight the risk of deflation.

In the Sonntag interview, Jordan reiterated the bank’s
policy: “We’re not accepting an excessive appreciation of the
franc. We’ve acted accordingly and intervened in the foreign
exchange market.”

Jordan said the moderate rise in the Swiss franc had not
hampered the recovery of the Swiss economy, which is faring
better than those of other European countries.

“But some uncertainties remain so we’re keeping a close eye
on the Swiss franc-euro exchange rate.”

In December, the SNB relaxed its intervention stance to
allow limited currency appreciation, and since then the franc
has risen more than five percent against euro.

At its most recent policy review in March, the SNB raised
its growth forecast for Switzerland to 1.5 percent for 2010 and
also said inflation would breach its 2 percent threshold for
price stability by 2012. [ID:nLDE6291VQ]

Jordan also told Sonntag that although there was a lot of
liquidity in the system, so far there was still very little
inflationary pressure.

“We have the means of withdrawing this liquidity again, as
soon as we see a threat to price stability,” he said. “However,
it’s hard to know when the right moment is to do so.”
(Reporting by Catherine Bosley; Editing by Louise Heavens)

Rates right for now but SNB eyeing mortgage mkt-Jordan