SNB’s Schlegel says will not hesitate to modify policy if price stability is endangered
Swiss National Bank Chairman Martin Schlegel said on Wednesday that inflationary pressures have increased as the October figure exceeded expectations. Schlegel added that the central bank won’t hesitate to modify policy if price stability is endangered.
Swiss National Bank Chairman Martin Schlegel affirmed on Wednesday that the central bank will not hesitate to adjust its policies if inflation poses a threat to price stability. October's inflation figure in Switzerland surpassed expectations, indicating rising inflationary pressures. The SNB, Switzerland's central bank, is committed to maintaining price stability, which it defines as a rise in the Swiss Consumer Price Index (CPI) of less than 2% annually.
The bank's Governing Board determines the policy rate based on its price stability objective. If inflation exceeds the target or is projected to do so in the near future, the SNB will take measures to curb excessive price growth by raising its policy rate. Higher interest rates typically strengthen the Swiss Franc (CHF) by offering higher yields and attracting investors.
Despite no major second-round effects of the recent inflation surge observed so far, the SNB remains vigilant and will closely monitor the situation, particularly for potential second-round inflation effects. The SNB's interventions in the foreign exchange market aim to prevent the CHF from appreciating excessively against other currencies, which could negatively impact Switzerland's export sector.
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