SNB’s Jordan: We cannot rule out further monetary policy tightening
Swiss National Bank (SNB) Chairman Thomas Jordan is addressing a press conference after the central bank announced a 25 basis points (bps) rate hike, raising the key rate to 1.75% in the June quarter.
Key takeaways
Marked decline in inflation is welcome.
Our monetary policy is significantly more restrictive than one year ago.
Monetary tightening has strengthened Swiss Franc, which has damped imported inflation.
Rise in rents will lead to higher domestic inflation.
Still, underlying inflation pressure has risen further.
We cannot rule out further monetary policy tightening.
There is a danger that inflation becoming entrenched above 2%.
Inflation caused by higher rents is not a reason for refraining from rate hikes in future.
Most likely we will have to tighten monetary policy again, but we can also take more gradual approach.
A gradual approach to interest rate rises is appropriate at present, we can look again in September.
View that we would have better monetary policy by not tightening today is false.
Clear necessity to tighten monetary policy now, we cannot circumvent situation with higher rents..
We are never relaxed when inflation is outside our target range.
Market reaction
USD/CHF has erased gains on the above comments, trading at 0.8930.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
