ZURICH: The Swiss National Bank will do everything it can to bring inflation down, Vice Chairman Martin Schlegel said, including hiking interest rates further as well as selling foreign currencies.
“Our mandate is crystal clear, and that is price stability,” Schlegel told Swiss broadcaster SRF in an interview broadcast on Monday.
“And we’re going to do everything we can to get inflation back to the target range of 0 to 2%.”
Swiss inflation edged lower to 2.9% in March, as fuel costs fell sharply, data showed on Monday, but it remains well above the central bank’s target level and interest rates are expected to rise further.
Headline annual CPI has been above the SNB’s target range since February 2022.
As part of ongoing efforts to rein it in, the central bank last month hiked interest rates by 50 basis points to 1.5% - the fourth policy meeting in succession that it has lifted rates.
Economists expect the central bank to raise interest rates again in June, a move Schlegel did not rule out.
“Of course I can’t make any forecasts, but you can see our inflation forecasts are higher now than they were in December,” he told SRF. “That means, that if necessary we will continue to raise interest rates.” The current interest rate level of 1.5% was also not particularly high, Schlegel said.
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“And we don’t see any signs at the moment that that could threaten financial stability in Switzerland,” he said.
The central bank will continue to sell foreign currencies, a move designed to strengthen the franc, whose high value protects Switzerland from inflation via more expensive imports.
“We said quite clearly at the last assessment that we are also prepared to sell foreign currencies, to actually strengthen the franc,” Schlegel said. “That’s what we did in the last quarter, to the tune of 27 billion.
That’s quite a big number. We look at the exchange rate and will intervene if necessary.“
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