© Reuters. FILE PHOTO: The building of the Swiss National Bank (SNB) is pictured in Bern, Switzerland June 16, 2022. REUTERS/Arnd Wiegmann
By Paul Carrel
LAUSANNE, Switzerland (Reuters) -Swiss National Bank Chairman Thomas Jordan issued another rate rise warning on Monday, saying it was likely the central bank will need to act again as inflation is set to remain elevated.
Jordan said that given inflation levels and the fact that Swiss interest rates are still low, “it cannot be excluded that the SNB will raise interest rates in December”.
The SNB appears to be preparing for further interest rate hikes after already raising rates twice this year to 0.5%. Although Swiss inflation eased to 3.0% in October, from 3.3% in September, it remains high by Swiss standards.
“There is a high probability that the SNB will have to tighten its monetary policy further,” Jordan told business leaders in Lausanne, before reiterating his point for emphasis.
“The next meeting will be in December and there is a high probability that it will be necessary to tighten monetary policy again to make sure that inflation can be fought sufficiently.”
Jordan also said nominal appreciation of the Swiss franc is helping guard against inflationary pressure, reiterating that the SNB was prepared to buy or sell francs to keep the safe-haven currency at an appropriate level to address inflation.
Jordan had said last week the SNB was prepared to take “all measures necessary” to bring inflation back down to its 0-2% target range and that current monetary policy was not restrictive enough to do the job.
Jordan said the SNB saw limited second-round wage effects in Switzerland and that the central bank still had credibility in the eyes of the business community that inflation will moderate.