SNB Chairman Martin Schlegel defended the central bank's policy framework on Thursday, saying it has kept prices stable through repeated global shocks. His speech came as Swiss inflation rose to 1.5% in October. He gave no guidance on the next rate decision.
SNB Chairman Martin Schlegel defended the central bank's monetary policy framework on Thursday, arguing that it has maintained price stability despite repeated global economic shocks. He spoke at an event in Zurich. He pointed to Switzerland's open economy and the Swiss franc's status as a major safe-haven currency as sources of exposure to outside disturbances.
According to Schlegel: "The SNB has fulfilled its mandate — price stability in the medium term", he said. He added that the SNB had kept inflation within its 0–2% price-stability range most of the time.
How rates and currency sales worked together
Schlegel highlighted the flexibility that comes from combining interest rates with foreign-exchange transactions. During the post-pandemic inflation surge, the SNB first allowed the franc to appreciate, which helped contain imported inflation. It then raised interest rates and sold foreign currencies to support the currency further.
Those measures helped bring Swiss inflation back within the target range after it exceeded 3% in 2022. Schlegel also defended defining price stability as a 0–2% range rather than a fixed rate, arguing that this lets policymakers tolerate temporary fluctuations without overreacting.
Inflation at 1.5% lifts expectations of a December rate hike
The remarks come as Swiss inflation accelerated from 1.0% to 1.5% year on year in October, its highest rate in nearly three years, driven largely by higher fuel costs. As a result, economists expect the SNB could raise its policy rate from the current 0% at its December meeting.
However, Schlegel did not comment on the latest inflation figures or give guidance on the next decision. Inflation at 1.5% remains inside the SNB's range, so the key question is whether higher energy costs create more persistent price pressures or stay a temporary increase.
Source: ActionForex
Trading involves risk.
Risk Disclaimer
