Swiss National Bank won’t hesitate to tighten monetary policy, board member says


A general view of the Swiss National Bank (SNB) building in Zurich, Switzerland December 16, 2021. REUTERS/Arnd Wiegmann

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ZURICH, May 23 (Reuters) – The Swiss National Bank will tighten monetary policy if inflation remains high in Switzerland, board member Andrea Maechler said in an interview published on Monday.

The European Central Bank on Monday became the latest institution to signal it was raising rates to tackle soaring inflation, following similar moves by the US Federal Reserve and the Bank of England. Read more

The SNB could follow suit if Swiss inflation remains outside its 0-2% target range. April saw the highest inflation rate in Switzerland for 14 years, with prices up 2.5%.

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“If the inflation that we anticipate does not drop in the medium term to a range between 0% and 2%, we will not hesitate to tighten our policy,” Maechler told the Swiss newspaper Bilan.

The SNB now has the world’s lowest interest rate of minus 0.75% which, together with its willingness to intervene in the currency markets, has been the basis of its monetary policy for the past seven years.

The SNB’s response to higher inflation “will depend on both inflation dynamics and the economic outlook in Switzerland and abroad,” Maechler said.

“We have always said, as soon as we can lift the negative interest rate, we will do it. We don’t know when we can do it though.”

Maechler declined to say whether the SNB would follow a possible interest rate hike by the ECB in July.

“Our goal is to conduct a monetary policy suited to the Swiss economy to ensure price stability in the medium term,” she told the newspaper.

Maechler said the SNB had no target value for the Swiss franc’s exchange rate, while higher inflation abroad meant a nominally stronger franc could be tolerated without hurting the economy. .

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Reporting by John Revill, editing by Silke Koltrowitz and Michael Shields

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