Rates too low for housing market-SNB’s Danthine

* Low rates “fertile ground for excess”

* ECB tightening would give SNB more room for manouevre

ZURICH, April 2 (Reuters) – Swiss interest rates are too low
for the booming housing market but the strong franc puts the
Swiss National Bank in a difficult position, board member
Jean-Pierre Danthine was quoted as saying on Saturday.

“We are in a dilemma,” Danthine told the Basler Zeitung
daily in an interview.

“For the real estate sector, interest rates are clearly too
low at the moment,” he said, adding that low rates created
“fertile ground for excesses.”

Danthine said he hoped the European Central Bank would raise
rates soon, which would give the SNB “more room for manoeuvre”.

The International Monetary Fund (IMF) said in its assessment
of the Swiss economy this week that the central bank should be
in a position to tighten borrowing costs in the near-term,
barring any more shocks. [ID:nLDE72R13M]

The IMF also called for the authorities to keep a close eye
on the booming Swiss housing market, warning of lax lending
standards in the mortgage market.

SNB vice-chairman Thomas Jordan said in an interview this
week the franc’s surge against the dollar limits the central
bank’s leeway to raise rates. [ID:nLDE72S26G]

At its quarterly monetary policy meeting earlier this month,
the SNB kept interest rates ultra-low despite an overall
improved outlook for the economy, citing risks from Europe’s
debt crisis and the Japan disaster. [ID:nLDE72F1D8]

But the central bank dropped any reference to deflation
risks in its statement and raised its growth forecast, which
economists said opened the door for rate hikes later this year
although the record-high franc remains an obstacle.
(Reporting by Emma Thomasson; Editing by Jeremy Laurence)

Rates too low for housing market-SNB’s Danthine