SNB board member says more rate hikes may be needed

Swiss inflation dipped to 3% in October from 3.3% in September. Keystone / Anthony Anex

The Swiss National Bank (SNB) may raise interest rates again to fight Swiss inflation which remains “too high”, SNB governing board member Andrea Maechler said in an interview published on Friday.

Swiss inflation dipped to 3% in October from 3.3% in September, but the fight against inflation is not over, Maechler toldExternal link the Swiss business newspaper L’Agefi.

The SNB expects inflation to drop to 2% by the third quarter of 2023, the top end of its price stability objective which it defines as inflation of 0-2%.

The central bank has already hiked rates twice this year and now has a policy interest rate of 0.5%.

“But it is not out of the question that, based on new figures and developments, further rate hikes may be necessary to ensure price stability in the medium term,” Maechler told L’Agefi.

“So it is really important to make an overall assessment with the figures we will have in December,” she said, referring to the next monetary policy announcement on December 15.

There are more signs that price increases are spreading to goods and services that are not directly affected by the war in Ukraine or the consequences of the pandemic, Maechler said, while electricity prices will rise steeply.

“On the one hand, a single figure will never allow us to claim victory, and on the other hand, it is still 3%, far from the range that we associate with price stability,” Maechler said.

“We will claim victory when inflation settles below 2% on a sustainable basis.”

Swiss inflation is low compared to other countries – 7.7% in the United States and 10.7% rate in the eurozone – but is still “too high”, Maechler said.

The SNB would make policy based on its priorities, not how other central banks acted, she added.

“In the end, what guides us is not what others do, but the fact that we conduct monetary policy in the general interest of the country,” Maechler said.