© Reuters. The Swiss National Bank (SNB) building is seen near the Limmat river in Zurich, Switzerland March 23, 2023. REUTERS/Denis Balibouse
ZURICH (Reuters) – The Swiss National Bank is ready to tighten its monetary policy to combat inflationary pressure, which it sees spreading to other across the Swiss economy, Vice Chairman Martin Schlegel said on Friday.
The SNB also stood ready to intervene in the currency markets as necessary to ensure its price stability goal of inflation between 0% and 2%, he said.
“We have increasing signs that inflation is spreading to other goods and services, not linked to energy and supply bottlenecks,” Schlegel told an event organised by the Asset Management Association Switzerland in Bern.
Although inflation rates around the world had dipped, Schlegel said it was too early to sound the “all-clear” on price rises.
The SNB currently forecasts Swiss inflation to fall from an average level of 2.6% this year to 2% in 2024 and 2025, but the outlook remained very uncertain, Schlegel said.
“We cannot rule out further tightening of monetary policy to ensure price stability,” Schlegel said.
Another factor to be considered was the impact of higher interest rates in Switzerland on rents, which could go up later in the year and add to inflationary pressure, he added.
The SNB has raised interest rates four times over the past year to tackle inflation, which although low in comparison to other countries, remains elevated by Swiss standards.
Consumer price growth eased more than expected in April to 2.6%, but remained outside the SNB’s target range for the 14th months in succession.
SNB Chairman Thomas Jordan earlier this week said the SNB needed to bring inflation back below 2% as soon as possible to prevent inflation perceptions becoming entrenched in households and businesses.
May inflation data for Switzerland is due on June 5. The SNB is due to give its next monetary policy assessment on June 22.
