SNB Vice Chairman Martin Schlegel defended the central bank’s use of foreign exchange interventions, highlighting their effectiveness in maintaining price stability within Switzerland.
“Have foreign exchange interventions contributed to achieving price stability? Yes, they have,” he said at an event in Geneva overnight.
He further elaborated that without utilizing foreign currency sales, SNB would have faced the necessity to escalate the policy rate significantly higher.
Schlegel also noted a modest average of 0.3% over the last fifteen years. He argued that, in the absence of foreign exchange purchases, inflation rates would have dipped considerably lower, potentially entering deflationary territory.
“Estimates suggest that it would have been significantly below zero without the purchases; we would thus not have fulfilled our mandate,” Schlegel pointed out.
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