Swiss National Bank (SNB) Chairman Thomas Jordan sees only modest inflation risk in Switzerland. This is because the central bank maintains cautious optimism for global economic recovery. This was derived from a newspaper interview.
Jordan said in the interview with Swiss newspaper Schweiz am Wochenende that in Switzerland, they believe the inflation risk is modest. He also added that until recently inflation here was even negative, meaning consumer prices were falling slightly, now it’s back in positive territory. The National Bank expects moderate inflation. The country’s economy was not overheating and its monetary policy appropriate.
The strong currency also works to dampen inflation. The franc remains highly valued. The SNB, since 2015, has charged an interest rate of minus 0.75% on the overnight deposits of commercial banks. They have also intervened in currency markets to keep a lid on the value of the safe-haven Swiss franc. The SNB hoped one day to come out of the phase of negative interest rates. But such policy remained necessary at the moment, said Jordan.
Jordan also stated that in the current environment, without negative interest rates the franc’s value would increase markedly. This would massively harm our economy, associated with rising joblessness and negative inflation and that wouldn’t help anyone.