Swiss National Bank Generation Change Does Not Alter Policy, Board Member Says
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Loading... - Arthur Garcia
- 14 Feb 2025
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The recent generational change at the Swiss National Bank (SNB) will not affect its commitment to maintaining low inflation, according to governing board member Petra Tschudin. In an interview with the Swiss newspaper Neue Zuercher Zeitung, Tschudin emphasized that the central bank's core tasks, instruments, and processes remain unchanged despite the leadership transition.
Former chairman Thomas Jordan stepped down in September after 12 years, with Martin Schlegel taking over the role. Tschudin and fellow board member Antoine Martin joined the three-member board last year, which is responsible for setting interest rates.
Tschudin reiterated that maintaining price stability—defined by the SNB as an annual inflation rate between 0% and 2%—is the central bank's primary objective. She noted that the SNB has a "toolbox" of instruments at its disposal, including the ability to buy or sell foreign currency, to achieve this goal.
With Swiss inflation dropping to 0.4% in January, its lowest level since April 2021, markets anticipate that the SNB will proceed with interest rate cuts from the current 0.5% level at its upcoming meeting on March 18. Tschudin acknowledged that while inflation may temporarily exceed the target range, the key focus is on achieving desired inflation levels in the medium term.
The discussion also touched on the topic of negative interest rates, a policy the SNB implemented from December 2014 until September 2022. Tschudin highlighted that negative rates are an important tool for the SNB, particularly for managing interest rate differentials in a low-interest environment. Chairman Schlegel has indicated a willingness to consider reintroducing negative rates, although he prefers to avoid this path if possible.
Tschudin explained that negative interest rates could help prevent excessive appreciation of the Swiss franc, which would lower inflation by making imports cheaper while also impacting exporters by raising the cost of their products abroad.
The SNB's commitment to its inflation targets and monetary policy tools remains steadfast despite leadership changes. As the central bank navigates the current economic landscape, it will continue to prioritize price stability while considering various instruments, including the potential reintroduction of negative interest rates, to manage the Swiss economy effectively.
