Make Kitco Your Homepage

Swiss National Bank's Maechler says further rate hikes 'quite possible'

Kitco News

ZURICH, Oct 5 (Reuters) - The Swiss National Bank is prepared to raise interest rates further to tackle inflation after its recent 75-basis-point hike, SNB Governing Board member Andrea Maechler said on Wednesday.

"It could be quite possible that we have to make further interest rate increases," Maechler told an event in Zurich. "We will have to see over time.

The central bank ended its era of negative interest rates last month when it raised its policy rate to 0.5%, switching its focus to curbing inflation from trying to stem the rise of the safe-haven franc.

After being virtually absent over the last 30 years, inflation has returned, Maechler added, with Swiss inflation reaching 3.3% in September.

The SNB would monitor its inflation forecasts and work towards getting inflation back towards its target of 0-2%, she told the event organised by the KOF Swiss Economic Institute.

The strong value of the Swiss franc had helped reduce the impact of imported price rises, Maechler said, although the SNB stood ready to intervene in the currency markets, Maechler said.

"Interest rates are in the positive, that is a good thing. That means that monetary policy will be more steered through interest rates; that means we are returning to conventional monetary policy."

"Still, the exchange rate will continue to play an important role for our monetary conditions. We have said we are ready to further intervene when the franc is too strong and sell Swiss francs," Maechler said.

"And if the franc becomes significantly weaker we are ready to use our balance sheet, that means selling the foreign currencies we hold."

Reporting by John Revill; Editing by Michael Shields and Bernadette Baum
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.