LUcerne, Switzerland (Reuters) – Swiss National Bank President Thomas Jordan said on Friday the Swiss National Bank was ready to take further steps to combat inflation, even though price increases in Switzerland are relatively modest compared to international peers.
Swiss inflation reached 3.5% in August, its highest level in nearly 30 years, albeit well below the 9.1% level in the eurozone, the 9.9% level in Britain, and the 8.3% level in the United States.
The Swiss National Bank responded on Thursday by raising the interest rate to 0.5%, ending an era of nearly 8 years of negative interest rates.
In comments prepared for an event in Lucerne, Jordan said: “Inflation in Switzerland is lower than abroad. However, in this country as well, it is still rising much more than was generally expected.”
“At 3.5%, it is at its highest level since the 1990s. It is well above the range that the SNB equates with price stability, 0% to 2% over the medium term.”
The central bank can raise interest rates again to combat inflation and ensure price stability, which Jordan considered the Swiss central bank’s top priority.
“Ensuring price stability is a challenge and requires the full attention of the Swiss National Bank,” Jordan said.
“It cannot be excluded that additional increases in SNB policy will be necessary to ensure price stability throughout the year.”
over the medium term,” he reiterated his message from Thursday.
Economists expect the Swiss National Bank to raise interest rates again in December and March 2023.
Jordan said the central bank would also be active in foreign exchange markets when necessary.
The Swiss National Bank said it will prevent a major devaluation of the franc – whose strength has mitigated the impact of imported inflation.
Last year, the Swiss National Bank did not resist the appreciation of the safe-haven currency, which rose in value by 4% between the fall and spring of 2002, making imports cheaper.
Jordan said more action may be needed because there are increasing signs of inflation spreading in goods and services that have so far not been affected by the war in Ukraine or pandemic bottlenecks.