SNB can live with inflation going below 0% for a short time, Tschudin says
- Tschudin: SNB would take rates below zero if it had to
- SNB expansive monetary policy is appropriate, Tschudin says
- SNB held rates at 0% at last meeting in September
By John Revill
Swiss National Bank governing board member Petra Tschudin said on Thursday that if inflation in the country fell below 0% for a short time, the central bank could live with it.
Speaking at an event in Basel, Tschudin also said that the SNB's expansive monetary policy is currently appropriate.
The SNB aims for annual inflation of between 0-2%, with the latest reading showing a rate of 0.2%.
"What's important to us is this: if there's some kind of short-term shock - for example, oil prices drop sharply - and that's it, then if inflation briefly falls below zero, that's not a problem for us," Tschudin said.
The central bank would be much more concerned if there was a shock with long-lasting effects which brought inflation below its target.
This was currently not the case with the SNB's forecasts showing inflation within its target range into the first half of 2028.
"If you look at the inflation forecast, you can clearly see that inflation lies nicely within this band," Tschudin said. "We are in a situation where monetary policy is appropriate.
"It is currently expansionary. As inflation repeatedly surprised us on the downside, we have gradually loosened monetary policy," she added. "At the moment, we are where we think we need to be."
Last month the SNB kept its interest rate on hold at 0%, noting that U.S. President Donald Trump's tariffs had dimmed the outlook for the Swiss economy going into 2026.
The SNB would continue to use interest rates as its main instrument to steer monetary policy, she added, with currency interventions when necessary as an additional measure.
The central bank would take interest rates below zero if necessary to combat persistently low inflation, Tschudin said, adding the measure had worked when used in the past.
