Central Bank of Switzerland: Will not raise interest rates despite rising inflation

The recent rise in inflation in Switzerland does not justify an increase in interest rates, said the chairman of the Central Bank of Switzerland, Thomas Jordan, on Friday, showing that he does not follow the policy of other central banks that have started their own increases to cope with the jump prices, as reported by Reuters.

Sweden’s central bank on Thursday became the last to raise interest rates, following increases by the US Federal Reserve and the Bank of England.

While Swiss inflation has risen to its highest level in recent years, reaching 2.4% in March and above the SNB’s target for price stability of 0-2%, the central bank is pursuing a more relaxed policy for the current situation.

“Why didn’t we just raise our policy rate? Two reasons have so far been in favor of such a measure,” Jordan said in comments prepared for the SNB shareholders’ meeting.

“Firstly, inflationary pressures are moderate here in Switzerland. Secondly, inflation is likely to return to the range that is compatible with price stability in the foreseeable future.”

The SNB forecasts that Swiss inflation will average 2.1% this year, before declining in 2023 and 2024. So far there is no evidence that higher energy and raw materials supply more expensive goods and services, Jordan said. .

“So the economic conditions are right now,” Jordan said. “However, if there are signs of strengthening and spreading inflationary pressures, we will not hesitate to take the necessary measures,” he added.

Although the franc has recently jumped to a seven-year high against the euro, overseas price hikes have meant “almost no change in the real exchange rate” in recent quarters, Jordan said. “We do not react mechanically in every case of upward pressure,” he added.