In a radio interview with public broadcaster SRF aired on Saturday, SNB President Thomas Jordan subtly hinted at the potential need for a tighter monetary policy. This comes on the heels of the Swiss central bank’s recent interest rate hike, which saw an increase of 25 basis points to 1.75% last Thursday.
Interpreting SNB’s inflation forecasts, Jordan said, “If you look at our inflation forecasts and interpret them correctly, then you’ll see that from today’s perspective monetary policy possibly isn’t tight enough to anchor price stability.”
Acknowledging the inevitable, Jordan added, “We can’t completely prevent second-round effects — that would be an illusion — but we have to fight them.” These second-round effects typically refer to changes in wages and prices in response to initial inflationary shocks, underlining the broader impact of inflation on the economy.
