In view of high inflation rates, Switzerland is threatened with a recession. The Swiss National Bank (SNB) responded by raising interest rates.
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the essentials in brief
- In view of the high inflation rates, the Swiss economy fears a recession.
- The Swiss National Bank responded by raising interest rates.
- Federal Reserve Chairman Thomas Jordan believes more tightening is needed.
In view of high inflation rates, the economy fears a recession. The Swiss National Bank (SNB) recently reacted with a surprisingly strong interest rate hike. If necessary, she intends to take further steps.
«We have published a new inflation forecast. If you interpret them correctly, you can see that further tightening is probably needed”. That’s what SNB boss Thomas Jordan said at a conference in Zurich on Wednesday.
“We do not know exactly when and how much, but these inflationary pressures are not yet fully combated.” Jordan did not name a time frame: “We will first wait and see whether the measures already taken are sufficient or whether further intervention is required,” he emphasized.
Swiss National Bank sees risk in energy prices
The situation is likely to remain tense for a while, Jordan explained. “Because the situation is currently very complicated and requires well thought-out measures,” he said at the “Point Zero Forum”.
The combination of large amounts of money and the currently very difficult market conditions is a dangerous mix, and not only from a global perspective: “The SNB certainly sees risks that high energy prices can lead to secondary and tertiary price effects,” explained Jordan. That is why the decision was made to take a first strong interest rate step.
However, inflationary pressures are unlikely to disappear anytime soon. Ultimately, monetary policy has no impact on energy prices or supply chain issues.
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More on the subject:
Thomas Jordan Monetary Policy
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