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Inflation expected to exceed Swiss central bank target in 2023

inflation
The OECD indicated that it expects inflation to peak at 2.4% this year, above the 0%-2% range equated with price stability by the Swiss central bank. Keystone / Alexandra Wey

Consumer prices in Switzerland are likely to exceed the Swiss National Bank's target range this year, notes the Organization for Economic Cooperation and Development. Persistent inflation is prompting the central bank to tighten its monetary policy further.

In its quarterly Global Economic Outlook report, the OECD indicated that it expects inflation to peak at 2.4% this year, above the 0%-2% range equated with price stability by the Swiss central bank.

+ Five questions about the price watchdog’s inflation warnings

By 2024, however, inflation should fall back to 1.2%, added the OECD, confirming earlier forecasts.

“Monetary policy will have to be tightened again to ensure that inflation returns to its target range,” warned the economists, as the SNB is due to announce its decision on the matter on Thursday. Most experts expect the key interest rate to be raised by a further 25 basis points to 2%, but a pause in the rate hike cannot be ruled out.

Swiss growth prospects were also confirmed, with gross domestic product (GDP) expected to rise by 0.6% in 2023 and 1.2% the following year.

“Tighter financial conditions, sluggish confidence and rising inflation will weigh on household consumption and private investment. Geopolitical tensions and high uncertainty will dampen trade,” the OECD noted.

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