SNB Chairman Thomas Jordan, who is set to step down at the end of September, highlighted the challenges facing Swiss industry due to the recent strength of the Swiss Franc and weak demand in Europe. Speaking at an event overnight, Jordan emphasized the difficulties these factors pose for Swiss industrial goods, particularly given that Germany and Europe are the primary markets for the country’s industry.
“Germany and Europe are the main markets for industry. If the growth is weak there, this automatically affects demand for our industrial goods,” Jordan stated. He also acknowledged that the strong exchange rate adds further pressure, noting, “The exchange rate … does not make the situation easier. It makes it difficult for the industry.”
Jordan reaffirmed SNB’s commitment to maintaining price stability, defined as an inflation rate of 0-2%, which he described as a “crucial precondition for prosperity.” He reiterated that interest rates remain SNB’s main tool for achieving this stability, though interventions in currency markets are also on the table if needed.
Looking ahead, markets are currently pricing in a 70% chance of a 25bps rate cut by SNB at their next meeting on September 26, with a 30% probability of a more aggressive 50bps cut.
