In the post-meeting press conference, SNB Chair Thomas Jordan affirmed that “We cannot rule out further monetary policy tightening,” following a decision to increase interest rates by 25bos to 1.75% today.
“Without a more restrictive monetary policy, there would be a danger of inflation becoming entrenched and much stronger rate increases would be needed in the future,” Jordan warned.
Jordan acknowledged the recent marked decline in inflation as a welcome result of SNB’s more restrictive monetary policy in place for the past year. However, he cautioned that underlying inflationary pressure continued to intensify. “We are therefore observing persistent second-round effects in many domestic goods and services,” Jordan said.
Despite today’s rate increase, SNB’s new forecasts for inflation from 2024 onwards are higher than their March predictions. Jordan attributed this upward revision to ongoing second-round effects, increased electricity prices and rents, and sustained inflationary pressure from overseas.
SNB’s updated inflation projections show 2.2% in 2023 and 2024, and 2.1% in 2025, compared to previous forecasts of 2.6% for this year and 2% for the next two years.
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