National bank chief hints growth may slow

The president of the Swiss National Bank, Jean-Pierre Roth, says the threat of inflation is rising, along with possible risks to the Swiss economy.

He added that the SNB needed more information before determining future monetary policy.

“There are more question marks over the economy than in December, especially concerning the United States economy,” he told the Sonntag newspaper. “There are signs that the situation [there] is deteriorating rapidly.”

Roth warned that economic growth in Switzerland could fall below the SNB’s forecast in December of around two per cent for this year.

“We first need more information about which direction the risks are developing: In the direction of inflation or in the direction of recession?”

Roth also criticised banking regulators in the interview, saying they had made too many concessions leading up to the present credit crisis, which stems from troubles on the US subprime mortgage market.

“Supervision was not critical enough in all places,” he said. “Many regulators made concessions concerning bank capital reserves, and it showed that the banks do not have their risks under control.”