SNB Chairman Thomas Jordan said two reasons have spoken against a rise in interest rate in reaction to inflation. “First, inflationary pressure is moderate here in Switzerland. Second, inflation is likely to return to the range compatible with price stability in the foreseeable future,” he said.
SNB forecasts inflation to average 2.1% this year before declining in 2023 and 2024. “The monetary conditions are therefore appropriate at present,” Jordan said. “However, should there be signs of a strengthening and spread in inflationary pressure, we will not hesitate to take the necessary measures.”
On Swiss Franc exchange rate, he said, it there had been “hardly any change in the real exchange rate” over the past few quarters. “We do not react mechanically to every instance of upward pressure,” he added. “If you have followed the Swiss franc closely over the past months, you will know that it has gradually appreciated and has at times even fallen below parity to the euro.”
Also, SNB had “quite deliberately” allowed appreciation of the Franc. “This means that our economy can withstand the franc being stronger in nominal terms,” Jordan said. “The higher prices abroad and the nominally stronger Swiss franc roughly balance one another out.”