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MNI STATE OF PLAY: SNB Holds Rates As Inflation Spikes


The Swiss National Bank doubled its 2022 inflation forecast but kept the policy rate on sight deposits on hold at -0.75% Thursday, together with repeating its assessment that the Swiss franc was “highly valued” after it approached parity with the euro in recent weeks.

Inflation stood at 2.2% in February and is expected to come in at 2.1% for the year, above the SNB’s target of below 2% and 1.1 percentage point higher than December 2021’s projected level. It is then seen falling back to 0.9% for 2023, up from 0.6% in December, and in 2024 as the effects of high energy prices and supply bottlenecks fade.

The decision to maintain the evaluation of the franc as highly valued was taken in light of its valuation against a range of currencies and the inflation rate differential with other countries, President Thomas Jordan said, adding that the SNB was willing to tolerate some nominal appreciation in order to keep inflation in check.

But he stressed that both direct and verbal interventions - such as deputy governor Andrea Maechler’s March 5 reminder that the SNB stands ready to deploy its balance sheet as necessary - remain core elements of monetary policy strategy.


Annual GDP growth should be around 2.5% for 2022, down 0.5 percentage point from December’s forecast, and 1.2 percentage points less than that seen in 2021. However, downside risks to the growth outlook are considerable, Jordan said, with high levels of uncertainty due to the Russian invasion of Ukraine.

Inflation could also rise globally should the war worsen already-tight supplies of raw materials, he added, making second-round effects more likely, although there is no prospect of acute energy shortages in key economic sectors.

Russian assets owned by the SNB are now close to zero, Jordan said, after the SNB sold the majority of its already small holdings. Swiss banks’ exposure to Russia is also limited, he said, leading to only marginal negative impacts and presenting no risk to financial stability.

MNI London Bureau | +44 20 3983 7894 |
MNI London Bureau | +44 20 3983 7894 |

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