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For the Swiss National Bank policy makers, a surge in inflation seems a far-off phenomenon.
While European Central Bank and Federal Reserve officials have been at pains to stress how a jump in consumer prices is likely to fade again, their Swiss counterparts won’t need to do much explaining there. For all the impact of supply bottlenecks, tax rebates and massive fiscal stimulus around the world, inflation in Switzerland remains well below 1%.
Given that weak price backdrop, and the ECB’s renewed commitment to intensified stimulus in the neighboring euro region, SNB President Thomas Jordan and his colleagues are poised to keep their policy rate at a world-record low of -0.75% at their quarterly decision on Thursday. They’re also likely to reiterate their pledge to wage foreign exchange interventions to keep the franc from strengthening.
“Even if inflation is accelerating a bit in Switzerland, it’s still very slow,” said Nadia Gharbi, an economist at Banque Pictet & Cie SA in Geneva. “The ECB’s stance is still very expansionary, and for the SNB it’ll be the same. When their neighbors stay very accommodative, they can’t do much.”
The decision on interest rates will be announced at 9:30 a.m. in Bern, along with new forecasts for growth and inflation. A press conference with the three members of the SNB’s governing board is scheduled for 10 a.m.
After suffering its worst contraction in decades last year, the Swiss economy is emerging from the pandemic more resilient than some of its neighbors. Data suggest its momentum is strengthening quickly.
The Swiss government upgraded its growth forecast for this year to 3.6% from an earlier prediction of 3% on Thursday.
The global supply crunch and pickup in demand is showing up in Swiss economic data, including manufacturers’ sale prices, which showed the cost of imported goods surging 6.4% in May from a year earlier.
Still, compared with many of its trading partners, the effect is moderate.
The Swiss government sees an inflation rate of 0.4% this year, picking up to 0.5% in 2022.
“We’re playing in a lower league” in Switzerland, said UBS Group AG economist Alessandro Bee.
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