The inflation rate is currently 3.4 percent in Switzerland.
(Photo: dpa)
Zurich In contrast to other central banks, the Swiss National Bank is sticking to its existing inflation target. “We firmly believe that our definition of price stability has stood the test of time, even under the difficult circumstances of the past 15 years,” said SNB President Thomas Jordan, according to the speech on Saturday at the central bank symposium in Jackson Hole, Wyoming.
For the SNB, price stability is guaranteed as long as inflation stays within a range of zero to two percent. The SNB also sees the chosen definition as an advantage for the phase after the pandemic with its great uncertainties. Price stability has absolute priority.
A certain tolerance for fluctuations in the inflation rate is necessary for a small, open economy like Switzerland, which is repeatedly exposed to disruptions from abroad.
At 3.4 percent, inflation in the country is currently at its highest level since the 1990s. In order to bring inflation back into the target range in the medium term, the SNB raised interest rates by half a percentage point to minus 0.25 percent in mid-June. “The comparatively early and significant change of course in relation to the development of inflation and our outlook for a possible further tightening in the near future were therefore aimed at ensuring medium-term price stability without putting too much strain on the economy,” Jordan continued.
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