© Reuters. FILE PHOTO: Swiss National Bank (SNB) Chairman Thomas Jordan addresses a news conference in Bern, Switzerland June 16, 2022. REUTERS/Arnd Wiegmann
By John Revill
ZURICH (Reuters) -The Swiss National Bank gave another strong hint on Tuesday that it will raise interest rates again when its chairman Thomas Jordan said that current monetary policy was too loose to tackle inflation in Switzerland.
The SNB has hiked rates twice this year, to 0.5%, after holding its policy rate at minus 0.75% for more than seven years. It has also allowed the Swiss franc to appreciate in nominal terms to dampen the impact of price rises from imports.
“Monetary policy is still expansionary and we have most likely to adjust monetary policy again,” Jordan said in Zurich.
“There is a certain likelihood that monetary policy has to be tightened,” he added at an event, saying further increases “cannot be excluded”.
The market expects the SNB to hike rates at its next monetary policy meeting on Dec. 15, a forecast Jordan acknowledged, adding market expectations had the SNB’s policy rate rising to 1.5% to 2% in the next two years.
Although inflation eased to 3.0% in October, from 3.3% in September, it remains high by Swiss standards, and outside the SNB’s target range of 0-2% which it defines as price stability.
Inflation was also becoming widespread in Switzerland, beyond energy and goods directly affected by the conflict in Ukraine, Jordan said, with roughly 50% of the items in the country’s consumer price index increasing in price.
The SNB has been increasingly hinting at higher rates.
Jordan on Monday said another rate raise in December “cannot be excluded,” while on Friday he said the SNB was prepared to take “all measures necessary” to bring inflation down and that current monetary policy was not restrictive enough to do so.
“Our ambition is to bring inflation back to the range of price stability,” Jordan said on Tuesday, noting other central banks have also been raising rates.