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Swiss National Bank’s Maechler determined to bring down inflation
Global Banking & Finance Review®
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ZURICH (Reuters) -The Swiss National Bank will do “everything” to reduce inflation, governing board member Andrea Maechler said on Monday, saying last week’s rate hike was intended to signal the central bank’s determination to fight price increases in Switzerland.
ZURICH (Reuters) -The Swiss National Bank will do “everything” to reduce inflation, governing board member Andrea Maechler said on Monday, saying last week’s rate hike was intended to signal the central bank’s determination to fight price increases in Switzerland.
“We have tightened monetary policy and raised interest rates to send a clear signal that we will do everything to bring down inflation over time,” Maechler told broadcaster SRF in an interview to be shown later on Monday.
“There are ever more signs that price increases are spreading to goods and services which have not been affected so far,” she said. “We are acting to make sure that inflation does not become entrenched.”
Swiss inflation hit 3.5% in August, its highest in nearly 30 years, exceeding the SNB’s target rate of 0-2%. The SNB responded last week by raising its policy rate by 75 basis points to 0.5%.
Maechler declined to comment on further rate increases expected by economists in the coming months.
“I never speak of interest rate expectations,” she told the programme Eco Talk. “I can only say what the market expects, and it expects the SNB and other central banks to further increase their rates.”
Possible losses by the SNB from its massive foreign currency holdings would not influences its policy, Maechler added, saying now was not the right time to start reducing the balance sheet which stood at nearly 1 trillion Swiss francs ($1.01 trillion).
The Swiss franc, whose appreciation previously the focus of SNB policy, had risen in value in recent months and helped dampen Swiss inflation, Maechler added.
The SNB would intervene in future in currency markets if the safe-haven currency became too strong.
“That means currency buying,” she said. “When the franc is too weak, we are ready to buy.”
($1 = 0.9934 Swiss francs)
(Reporting by John Revill; Editing by David Gregorio)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to maintain economic stability.
A central bank is a national institution that manages a country's currency, money supply, and interest rates. It also oversees the banking system and implements monetary policy.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They are influenced by central banks' monetary policy decisions.
Monetary policy refers to the actions taken by a central bank to control the money supply and achieve specific goals, such as controlling inflation and stabilizing the currency.
Financial stability is a condition in which the financial system operates effectively, with institutions able to manage risks and absorb shocks without severe disruptions to the economy.
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