Swiss National Bank Chairman Thomas Jordan told Swiss broadcaster SRF on Monday that we have to take inflation developments seriously, and that while some of this inflation is certainly temporary, all central banks have to be careful it doesn’t become permanent.
Jordan reiterated that inflation is expected to come down and noted that, in the medium and long-term, monetary policy must ensure that inflation is always within the price stability range.
On the Fed moving towards tightening, Jordan noted that the Fed raising rates is a good sign for the US economy and shows that it is working at capacity.
Jordan expects the current rise in prices to be short-lived. “Some of this inflation is certainly temporary. We expect it to come down again,” Jordan added.
“On the other hand, all central banks have to be careful that it doesn’t become permanent, and that requires close monitoring of the situation,” Jordan added.
Rising prices are becoming an increasing concern for central banks around the world, with several indicating they are considering raising interest rates to head off inflation.
The US Federal Reserve last week said it was likely to hike interest rates in March and reaffirmed plans to end its bond purchases that month, surprising investors who had already braced for as many as four rate hikes until the end of the year.
Jordan said this was a good sign as it showed the U.S. economy was operating at capacity again, while also beginning the process towards the normalization of monetary policy after a period of ultra-low interest rates.
“It also means that interest rates around the world are going up a little bit and basically that’s positive news for Switzerland,” Jordan said.
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