SNB’s Schlegel: Inflation accelerates in recent months but remains within stability range

Swiss National Bank Chairman Martin Schlegel stated on Friday that inflation has increased in recent months but remains within the price stability range. The Swiss Franc exchange rate has presented a challenge for the Swiss economy, yet the real Franc has remained stable since 2020. High energy prices pose the risk of driving up prices elsewhere.

The bank backs the Swiss government's capital proposals to address issues stemming from the Credit Suisse crisis. As an independent central bank, the SNB's mandate is to maintain price stability in the medium and long term. This is achieved by ensuring suitable monetary conditions, determined by interest rate levels and exchange rates.

The SNB aims to keep the Swiss Consumer Price Index (CPI) growth below 2% per year. When inflation exceeds the target or projected to surpass it in the foreseeable future, the bank will attempt to curb excessive price growth by raising its policy rate. This typically strengthens the Swiss Franc, as higher yields make the country more appealing to investors.

However, the SNB refrains from intervening in the foreign exchange market when the Franc appreciates excessively against other currencies, as a strong Franc can hurt the competitiveness of Switzerland's export sector. The SNB meets quarterly to evaluate monetary policy and publish a medium-term inflation forecast.