Swiss Inflation May Have Peaked, Says SNB’s Jordan

Swiss Inflation May Have Peaked, Says SNB’s Jordan

30 January 2023

Swiss inflation may already have hit it highest level, claimed in an interview made on the sidelines of appearance at World Economic Forum in Davos, Thomas Jordan, Swiss National Bank President.

Inflation at its Peak?
Swiss inflation may have already peaked, but it’s too soon to write off new interest rate hikes, said Swiss National Bank President Thomas Jordan in an interview published in Schweiz am Wochenende on 21st January, as made during his appearance at World Economic Forum in Davos. “We assume that the peak of inflation is behind us, but the uncertainty is still there. If we look at our inflation forecast, we can see that inflationary pressures are still higher than we would like. We cannot, therefore, rule out having to further tighten monetary policy.” – said Jordan. He added that the central bank in the country continues to monitor the exchange rate of Swiss franc versus euro, however too strong CHF is not a problem for Swiss exporters, according to him.
Inflation in Switzerland
Inflation in the country hit 3% in November, not too high, but above the target of 0-2%, set by the SNB. Its peak was in August with 3.5% level, then it decreased a bit. If Jordan’s assumption is right, this was the highest level of inflation noted and this year it shall come back to almost in-target points. Inflation in Switzerland is not as big issue as in eurozone, other European countries or US due to mainly lower share of energy in consumption and very high exchange rate of Swiss franc that limit impacts of imported inflation. That is why in recent months the SNB has not been fazed by good price of CHF. Instead of trying to depreciate it by forex interventions it was rather watching as it goes up or even aiding its exchange rate to hit higher points versus euro by buying foreign currency.

CHF/EUR Back to Parity Level 
In the beginning of the year CHF exchange rate was at very good level, outperforming most of major currencies. In September 2022 Swiss franc hit 1.05 peak versus euro. But in recent days it came back to parity, as already observed in some months last year.