The Swiss National Bank has reconfirmed its expansionary monetary policy stance, based on negative interest rates and the readiness to intervene in foreign exchange markets to counter any excessive appreciation of the Swiss franc.
While the decision was as expected, the policy meeting was interesting for several reasons. Compared to September, the SNB revised upwards its conditional inflation forecasts for 2022 but left them unchanged and below 1% yoy for 2023 and 2024. Despite robust GDP growth - expected at 3.5% in 2021 and 3% in 2022 - inflation over the policy-relevant horizon is expected to remain at the low end of the 0-2% range which the SNB uses to define price stability. This reflects the expectation that energy prices and supply chain bottlenecks will moderate over time. Hence, the SNB has signalled that it does not feel much pressure to change monetary policy for some time to come.
Moreover, during the press conference after the Board meeting, President Jordan explained that the impact of the franc's rise has been mitigated by high inflation in other countries, so that the real exchange rate, adjusted for consumer price inflation (CPI), has remained almost unchanged since the start of the pandemic (see Chart 1).
