© Reuters. Swiss National Bank (SNB) Chairman Thomas Jordan attends the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 17, 2024. REUTERS/Denis Balibouse
ZURICH (Reuters) – Further interest rate hikes from the Swiss National Bank are not needed given the bank’s latest inflation forecasts, SNB Chairman Thomas Jordan told Swiss newspaper Aargauer Zeitung in an interview.
“We can currently see from the inflation forecast that further interest rate increases are not necessary to maintain price stability,” Jordan told the newspaper in an article published on Friday.
Achieving price stability is the SNB’s main target, which it defines as inflation in the range of 0-2%.
After a period when Swiss inflation was above 2%, triggering two interest rate hike by the SNB last year, price rises have slowed in recent months.
Inflation in December was 1.7%, while the SNB in December lowered its forecast price rises to a level of 1.9% in 2024 and 1.6% in 2025 – both within its target range.
Still, Jordan remained cautious about the future.
“The battle against inflation is not yet completely won, but we have a much better situation than last year,” Jordan said in the interview, which took place on the fringes of the World Economic Forum in Davos.
“According to our forecast, inflation should remain below 2% for the next three years,” he added, although he declined to say when rate cuts could occur.
Money markets suggest a 52% probability that the SNB will cut rates from the current level of 1.75% at the central bank’s next meeting On March 21.
Jordan acknowledged the impact of the Swiss franc’s appreciation on the Swiss economy, particularly exporters. The safe haven currency gained nearly 6% versus the euro, almost 10% versus the dollar and 4% against the pound last year.
“The appreciation of the franc poses challenges for many companies,” he said. The impact of the currency’s rising value however was reduced by higher inflation abroad, he said.
“Towards the end of 2023, we also saw a certain real appreciation of the franc,” he said. “Of course we take that into account.”
The SNB had reacted to the situation by no longer focussing on foreign currency sales, Jordan said, a move which in the past strengthened the currency, .