The Swiss National Bank said it is difficult to «assess the future course of the war and its economic impact,» and forecasts for both the global economy and Switzerland are subject to «very high uncertainty.»
The Swiss National Bank (SNB) is maintaining its expansionary monetary policy, and reiterated the Swiss franc is highly valued; results that were widely expected.
After raising its inflation forecasts by small increments over the past four meetings, the SNB revised the forecast for consumer prices in 2022 upward to 2.1 percent from the 1.0 percent forecast when it met in December.
Tight Situation
Consumer prices rose 2.2 percent on a yearly basis in February, «primarily due to the significant increase in the prices for oil products and goods affected by supply bottlenecks. The tight situation with regard to these products and goods is likely to persist in the coming months owing to the war in Ukraine,» the SNB said in a statement. The central bank also raised its forecast for inflation next year from 0.6 percent in December to 0.9 percent. It also made its first forecast for annual inflation for 2024, expecting 0.9 percent.
The revision is now more in line with the forecast from the State Secretariat for Economics (SECO) which on March 14 it released its latest forecast, raising the 2022 CPI forecast to 1.9 percent from 1.1 percent. For 2023, SECO kept its forecast at 0.7 percent annual growth.
Economy and War
The SNB said it is difficult to «assess the future course of the war and its economic impact,» and forecasts for both the global economy and Switzerland are subject to «very high uncertainty.» Still, the SNB seems GDP increasing 2.5 percent this year.
To date, the war in Ukraine affected the Swiss economy above all via strong commodity price gains, which are likely to weigh on consumption and increase production costs. While foreign trade will also be affected, the effects won't be as severe given Switzerland’s limited direct economic ties to Ukraine and Russia.
