SNB’s Jordan identifies minor inflation risk due to weakening franc

SNB Chairman Thomas Jordan highlighted at an event in Seoul today a “small upward risk” to the current inflation forecasts, which could mean a “more accommodative than intended” monetary policy if realized.

Jordan pointed out that such inflationary pressures are likely tied to declines in Swiss franc. To mitigate this, the central bank might consider engaging in foreign exchange sales to bolster the currency.

Moreover, Jordan noted that the natural rate of interest—which serves as a crucial benchmark for setting monetary policies—has shown signs of increasing and may continue to rise in the foreseeable future.

Despite these concerns, Jordan reassured that the current policy settings are expected to remain effective in maintaining price stability, even if the natural rate of interest edges higher.