With Fed signaling Wednesday that its cycle of interest rate hikes may have reached a peak, and only one more small ECB hike expected this year, SNB watchers are looking to June for its decision.
At a symposium at the University of St. Gallen, Thomas Jordan, the president of the Swiss National Bank indicated more is to come.
«We cannot rule out the possibility that further tightening of monetary policy will be necessary,» Jordan said, according to a «Reuters» report. «We need to ensure that inflation returns to the area of price stability.»
Inflation Slowing but Exceeding Target
In Switzerland, consumer price increases took a timeout in April, remaining unchanged compared to the previous month, the Federal Statistical Office (FSO) announced on Friday. Annual inflation moderated to 2.6 percent in April from 2.9 percent in March.
Core inflation excluding volatile food, energy, and fuel prices remained unchanged year-on-year at 2.2 percent.
The SNB is targeting a range of 0 to 2.0 percent for inflation which is seen as a benchmark for price stability.
Further Development Uncertain
Economists expected Swiss inflation to fall in April. But looking ahead, an expected increase in rents due to a higher reference interest rate and rising ancillary rental costs are likely to add upward pressure over the year. So far the strong Swiss franc against the euro mitigated imported inflation.
The SNB last raised the key interest rate by 50 basis points in March to its current level of 1.5 percent. In the US, the Fed's range is now 5.0 to 5.25 percent and the ECB's key rate is 3.75 percent. Although Fed chairman Jerome Powell signaled a possible pause in rate hikes, another move in June cannot be ruled out, economists say.
The SNB's next assessment of the situation and decision on monetary policy is scheduled for June 22.
