John Revill

ZURICH, (Reuters) – The Swiss National Bank considers the current inflation rise to be a temporary phenomena, Chairman Thomas Jordan indicated on Tuesday. However, the central bank would continue to monitor the situation closely.

The Bank of England and the U.S. Federal Reserve have raised interest rates in an effort to combat higher prices. However, the SNB, which is the lowest rate at minus 0.75 percent, has not yet increased its policy rate.

This is despite Swiss prices increasing by 2.4% in March compared to a year ago, their highest levels in years. Higher energy costs and shortages have pushed up the prices.

He stated that he believes that a significant amount of today’s inflation may only be temporary. He added, “But there’s a very big chance that some of the temporary inflation feeds into persistent inflation where all goods are affected.”

Jordan explained that central banks should adjust their monetary policies if inflation is too strong to be sustained.

He said that if central banks made incorrect calculations, it was possible for there to be too much inflation and an excessive tightening policy.

Jordan stated that while the SNB prefers to use interest rates in order to control inflation, it is still committed to buying foreign currencies.

We don’t have an intermediate target, but we do take into consideration the exchange rates and use interventions when the exchangerate is too high and… driving inflation to negative territory.”

Jordan stated that SNB would benefit from higher interest rates in countries other than its home country. This will allow it to have more flexibility when negotiating with its own rate.

Jordan stated that “as soon as we see the situation changing, we’re more than happy for us to return to a traditional implementation of monetary policy in which intervention doesn’t have as much importance as now.”