SNB Chairman sees National Bank well equipped for the future
Published: Friday, Apr 26th 2024, 10:20
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"The SNB will remain fully committed to ensuring price stability in Switzerland in the interests of the country as a whole." This was the promise made by the outgoing Chairman of the Governing Board Thomas Jordan in his speech at the General Meeting of Shareholders of the Swiss National Bank (SNB) in Bern on Friday, according to the text of his speech.
Jordan believes that the SNB is well equipped to ensure price stability in Switzerland in the future and to protect citizens from the "spectre of inflation". Focusing on the mandate and the monetary policy concept is no guarantee for a successful monetary policy. "We must always critically question our assessments, recognize changing framework conditions as early as possible and analyse their effects."
Today's General Meeting is Jordan's thirteenth and last as Chairman of the SNB Governing Board. As announced at the beginning of March, he will step down at the end of September 2024. It has not yet been decided who his successor will be.
"Price stability is important"
The latest episode of inflation has once again shown how important price stability is, Jordan continued. "Inflation inhibits economic growth and reduces prosperity for everyone. However, inflation places the greatest burden on the economically weakest groups in our society, as they are most affected by a loss of purchasing power."
It is therefore not surprising that the inflation that occurred after the pandemic received so much public attention, said Jordan. This was particularly the case abroad, where inflation was sometimes in the double-digit range. In Switzerland, inflation has been significantly lower and has been in the price stability range since mid-2023.
Monetary policy with a "steady hand"
"Nevertheless, inflation was also on people's minds in this country," Jordan continued. Since the outbreak of the coronavirus pandemic, price stability in Switzerland had been jeopardized in various ways. However, the SNB has succeeded in fulfilling its mandate despite extremely adverse circumstances. It had to think in terms of scenarios and weigh up different options for action.
"Our monetary policy concept has allowed us to react flexibly to the various constellations," explained Jordan. The SNB is not aiming for a specific inflation rate, but considers price stability to be achieved when inflation is between 0 and 2 percent. In addition, the Governing Board always has the medium term in mind when ensuring price stability.
"Our definition of price stability and medium-term orientation allow us to conduct monetary policy with a steady hand and not have to react to every deviation of inflation from a target value," said the SNB Chairman. During the pandemic, the SNB was able to live with inflation forecasts close to the lower limit of the target range. And when inflation threatened to move permanently away from the price stability range, the SNB reacted quickly and decisively to the rising inflationary pressure in the second half of 2021.
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