SNB: Good Exchange Rate of CHF Helps Swiss Economy

SNB’s Chairman Comments on CHF and Economy

Chairman of the Swiss National Bank, Thomas Jordan, has offered some comments on the Swiss economy and CHF exchange rate. He mainly stated that according to him good rate of Swiss franc is rather helping than hurting the country’s economy. He also added that: "Exchange rates play a role in inflation, when big central banks act, this helps us.”, while adding: "Real effective exchange rate of franc has been astoundingly stable." He also offered some thoughts on the SNB’s role: "We must ensure price stability over medium term. (…)"Price stability is our mandate, of course need to keep impact of policy on economy in mind as well." According to the chairman there is no decision yet as to what will be decided on next SNB’s meeting, on September 22. Next step depends on analysis that is now underway, and it would need to stop inflationary and exchange rate pressures: "Experience shows it was costly to fight inflation, more costly not to fight inflation at the start." Jordan claims that uncertainty about inflation is much higher than usual, but not at its peak, while sever gas shortages are fueling it up.

Economic Slowdown

Meanwhile according to the lates data the Swiss economy slowed down in the second quarter of 2022, by 0.3% comparing to the first quarter of the year. The manufacturing, construction, trade and financial services sectors all became weaker due to rising inflation and energy shortages. While tourism and hotel, restaurant, transportation sectors were booted by lifting of pandemic inflation, and consumer spending also went up during spring and early summer before inflation rise started to be an issue. Manufacturing though reported a -0.5% decrease in output, mainly the chemicals and pharmaceuticals industries suffered. There was also a -2.1% contraction in trade, -1.7% reduction for construction and a -1.5% reverse in financial services, which altogether held the economy back. The State Secretariat for Economic Affairs (Seco) informed of a slower rate of gross domestic product (GDP) growth than the 0.5% rise reported for Q1.