Following the Swiss National Bank (SNB) decision to reduce the policy rate for the second consecutive meeting, Chairman Thomas Jordan speaks on the inflation and policy outlook during the post-policy meeting press conference on Thursday.
Key quotes
Underlying inflation pressure has decreased.
Swiss Franc has significantly increased in past weeks.
Swiss inflation driven by prices for domestic services.
We will continue to monitor inflation development closely, adjust policy if necessary.
SNB willing to be active in forex markets as necessary.
Political risks add to uncertainty about inflation.
Franc appreciation due to political uncertainties.
We do not give any forward guidance regarding interest rates.
Will adjust policy rate to ensure inflation rate stays in range of price stability.
We will go forward looking at inflationary pressure.
The exchange rate plays a very important role, has an influence on inflationary outlook.
There is appreciation of Swiss Franc, that has an impact on monetary conditions.
Forex interventions can be in both directions.
The Franc plays an important part in monetary conditions.
We take into account the exchange rate when calculating our inflation forecasts.
Our main instrument is the SNB policy rate and can, when necessary, be active on the forex market.
Inflation is the mandate for the SNB, focus is on price stability.
Market reaction to SNB Jordan's comments
As of writing, USD/CHF is holding the rebound near 0.8900, adding 0.61% on the day.
SNB FAQs
The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
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