SNB’s Maechler says more rate hikes could be necessary

ZURICH (Reuters) – The Swiss National Bank could hike interest rates again to combat Swiss inflation which remains “too high”, SNB governing board member Andrea Maechler said in an interview published on Friday.

The battle against inflation has not been won despite a dip in Swiss inflation to 3.0% in October from 3.3% in September, Maechler told Swiss business newspaper L’Agefi.

In its latest inflation forecast, the SNB expects inflation to decline to 2% by the third quarter of 2023, the top end of its price stability goal which it defines as inflation of 0-2%.

The central bank has already hiked rates twice this year and now has a policy interest rate of 0.5%.

“But it is not out of the question that, based on new figures and developments, further rate hikes may be necessary to ensure price stability in the medium term,” Maechler told the newspaper when asked about the SNB’s options in December.

“So it is really important to make an overall assessment with the figures we will have in December,” she said, referring to the next monetary policy announcement on Dec. 15.

There are more signs that price increases are spreading to goods and services that are not directly affected by the war in Ukraine or the consequences of the pandemic, Maechler said, while electricity prices will rise steeply.

“On the one hand, a single figure will never allow us to claim victory, and on the other hand, it is still 3%, far from the range that we associate with price stability,” Maechler said.

“We will claim victory when inflation settles below 2% on a sustainable basis.”

Although Swiss inflation remained low compared to the 7.7% rate in the United States and 10.7% rate in the eurozone, it is still “too high”, Maechler said.

The SNB would make policy based on its priorities, not how other central banks acted, she added.

“In the end, what guides us is not what others do, but the fact that we conduct monetary policy in the general interest of the country,” Maechler said.