Swiss National Bank Chairman Martin Schlegel says record heat this year pushed up food prices but is not behind Switzerland's inflation surge, which he blames almost entirely on petroleum products. The SNB held its rate at 0% on Thursday and expects inflation to ease back within its 0% to 2% target through mid-2029.
Swiss National Bank Chairman Martin Schlegel said record heat this year has pushed up food prices, but he does not count it among the drivers of Switzerland's inflation surge. He spoke in an interview broadcast Saturday on radio station SRF.
Inflation doubled in August
Switzerland's annual inflation rate doubled in August to its highest in nearly two years, raising concerns that smaller harvests and lower water levels on transport routes like the Danube and the Rhine would make food more expensive and drive up prices overall. The SNB is closely watching that effect, Schlegel told SRF.
He said the dry summer has left a mark on food prices, pointing to certain price movements, but added that policy measures have counteracted it. As a result, the rise in inflation is almost exclusively attributable to petroleum products, he said.
Rate held at 0%
The SNB held its benchmark interest rate at 0% on Thursday, even as other central banks raise borrowing costs to tackle inflation tied to more expensive fuel. It could hold steady because it expects inflation to decline after a temporary increase and stay within its 0% to 2% target through the end of its forecast range, which runs to mid-2029, Schlegel said.
He added that the SNB assumes crude oil prices will come back down, gradually fading the effect of the recent oil-price increase over time.
Franc's pullback called a minor counter-trend
Schlegel also said the recent downturn in the franc's value is a small change after years of appreciation. According to Schlegel: “What we’ve just seen is a minor counter-trend.”
Source: Investing.com
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