Swiss National Bank's Martin: Inflation May Stay Elevated for Some Time

Swiss National Bank Vice Chairman Martin said at a press conference following the September monetary policy assessment that inflation may remain elevated for some time. He noted that due to rising raw material prices, global inflation is expected to stay high over the coming quarters, while surging energy prices have worsened business and household confidence.

**Short-Term Inflation Pressures and Medium-Term Outlook**

Martin stated that domestic inflationary pressures in Switzerland have remained almost unchanged compared to June. Although inflation may be slightly higher than previously expected in the short term, the conditional inflation forecast for the medium term remains unchanged and stays within the central bank's 0% to 2% price stability range throughout the entire forecast period. This aligns with earlier public statements by Swiss National Bank officials that the latest projections show inflation remaining within the target range through the first quarter of 2029.

**Policy Path Remains Open in Both Directions**

At the September meeting, the Swiss National Bank held its benchmark interest rate at 0% unchanged, marking the first pause in easing since early 2024. Martin's colleague, policy committee member Tschudin, had previously made clear that the SNB would not hesitate to reintroduce negative interest rates if necessary to ensure inflation remains within the target range. At the same time, she did not rule out the possibility of future rate hikes, emphasizing that the central bank would adjust monetary policy accordingly should new inflation-related information emerge. These statements indicate that the SNB's policy direction is currently open at both ends.

**External Factors Add Uncertainty**

Martin also mentioned that global economic growth in the first quarter was broadly solid, partly supported by investment in the artificial intelligence sector. However, Tschudin had previously warned that large-scale AI investment could push up prices in the short term due to chip shortages, posing upside risks to inflation, while its long-term effect of lowering inflation remains uncertain.