Middle East Conflict Threatens Inflation Relief, SNB Chief Warns

(Bloomberg) — The conflict in the Middle East could spark major problems for the central banks around the world, according to Swiss National Bank President Thomas Jordan.

Asked after the single greatest risk for monetary policy at the moment, Switzerland’s central bank chief named “the Middle East, where we have suddenly a negative supply shock with respect to energy.” This could boost oil prices and drive up inflation again, he told Bloomberg Television in an interview on Thursday.

“The geographic situation is such that a lot of supply goes through the Suez canal and also through the gulf,” Jordan said. “So there is really a center where if things turn out to be very bad, that could have a very negative impact on the global economy.”

The world’s first Group-of-10 central bank moving after the global inflation shock, the SNB unexpectedly cut its key interest rate on Thursday. It moved months ahead of peers as policymakers tried to prevent gains in the franc.

Jordan said that he currently sees “very little risk” that Swiss inflation will exceed the 2% ceiling of the SNB’s target again. Still, he added that an oil price shock could trigger a re-assessment of this.

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