SNB’s Schlegel Says Inflation Rate May Go Negative Again in 2026
(Bloomberg) — Switzerland could see its inflation rate fall below zero again this year but even a few months of that wouldn’t be a problem, Swiss National Bank President Martin Schlegel said.
Speaking to Francine Lacqua on Bloomberg Television, the central bank chief highlighted how his country’s currency finds itself in the eye of the storm when geopolitical concerns strike, such as this week, with possible impacts on consumer prices.
“It’s well possible this year that we will have negative prints,” Schlegel said, speaking on the sidelines of the World Economic Forum in Davos. “But this is not a problem for the Swiss National Bank because our target is medium-term inflation.”
The central bank has left its interest rate unchanged at zero for two meetings, demonstrating that its bar to going below that level — which risks damage to the financial system — is substantially high. Already before that, Switzerland had hardly any price growth, with a pickup to 0.1% in December being the first since July.
The SNB chief spoke in a week when the franc spiked up again against the dollar amid concerns sparked by US President Donald Trump’s stated desire to annex Greenland.
“If you look at the Swiss franc exchange rate in the last few days, it appreciated a little bit, but over the long run, a few months back, the exchange rate was more or less stable,” Schlegel said. “The main risk at the moment is of course the world economy, geopolitics — and as you know, the Swiss franc is a safe haven.”
Asked on what sort of shock it would take for the SNB to consider negative rates, he responded that it would need to be enough to endanger the medium-term price outlook.
“Whenever there is a crisis in the world, the Swiss franc appreciates and this has also an effect on inflation in Switzerland,” Schlegel said. “This could theoretically — or also in practice — be the case that then price stability would not be warranted any more. And then the Swiss National Bank would act.”
His comments come some two weeks after a summary of the discussion before the SNB’s December rate decision revealed that officials considered raising borrowing costs as well as lowering them in what appeared to be a shift in bias.
Negative rates are now off most economists’ agenda, with a majority now expecting the SNB to leave borrowing costs at zero until the beginning of 2028, according to a Bloomberg survey.
Swiss officials have appeared largely unfazed by the strong franc, which climbed to a decade high against the euro in November. The SNB allowed the strengthening and didn’t move against it with interventions, according to estimates by UBS.
Schlegel also said he holds Federal Reserve Chairman Jerome Powell in the “highest regard.”
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