Too soon to say inflation has peaked, says SNB boss

“You cannot say we have passed the zenith and now it is certainly heading lower,” Swiss National Bank President Thomas Jordan told a Finanz and Wirtschaft financial conference on Thursday. © Keystone / Anthony Anex

The president of the Swiss National Bank (SNB), Thomas Jordan, says the inflation outlook is more uncertain than normal and it is premature to say prices have peaked.

“You cannot say we have passed the zenith and now it is certainly heading lower,” Jordan told a Finanz and Wirtschaft financial conference on Thursday.

“If it comes to a power shortage situation, to a complete gas shortage in Europe, then it cannot be excluded that inflation pressure rises again. You have to be very cautious.”

The SNB increased its policy rate in June by half a point to -0.25%, its first rate hike in 15 years. At the same time, the central bank predicted a Swiss annual inflation rate of 2.8% for this year.

The SNB’s next quarterly policy assessment and inflation forecast is on September 22.

The Swiss central bank has switched its focus from trying to curb the safe-haven Swiss franc’s appreciation to tackling inflation, which reached 3.5% in August.

This is the seventh month in a row that Swiss inflation has surpassed the SNB’s 0-2% target range and has prompted speculation that the bank could soon tighten policy again.

The European Central Bank on Thursday lifted its key interest rate by an unprecedented 75 basis points and signalled further hikes, prioritising the fight against inflation even as the bloc’s economy is heading for a likely winter recession.

Canada and Australia also lifted rates this week. Japan is the only country among the 10 largest developed global economies that has yet to lift rates in this cycle.