Schlegel Downplays Hot Weather Impact on Swiss Inflation

Swiss National Bank Chairman Martin Schlegel said that this year's record temperatures have had an impact on food prices, but not been a major factor behind rising Swiss inflation. The country's annual inflation rate doubled in August to its highest in nearly two years.

The hot summer has affected food prices, with certain price movements evident, according to Schlegel. However, he emphasized that policy measures are being taken to counteract this effect, and the rise in inflation is almost exclusively attributable to petroleum products.

The SNB held its benchmark interest rate at 0% on Thursday, despite other central banks hiking borrowing costs to tackle rising inflation linked to more expensive fuel. Schlegel stated that they expect inflation to decline after a temporary increase and remain within their 0% to 2% target by the end of their forecast range in mid-2029.

Regarding the recent downturn in the value of the franc, Schlegel described it as a minor counter-trend following long periods of appreciation. The SNB is closely monitoring the impact of the hot weather on food prices and expects the price of crude oil to come back down.