SNB's Tschudin: Low Swiss Inflation Due to Low Expectations, AI a Short-Term Threat

Swiss National Bank (SNB) Governing Board member Petra Tschudin has weighed in on inflation and interest-rate expectations, suggesting that low inflation is largely due to low inflation expectations and the limited weight of oil in the Swiss consumer basket. According to her comments, artificial intelligence can potentially increase inflation in the short term.

Tschudin emphasized that the SNB does not publish interest-rate forecasts, and cautioned against interpreting the current inflation forecast as a signal that rates will remain unchanged over the three-year horizon. She noted that the franc has weakened due to higher interest-rate expectations abroad, which widen rate differentials against the franc.

The SNB is ready to take interest rates below zero if necessary, Tschudin stated, and pushed back against the idea that the current inflation forecast implies steady rates for an extended period. With Swiss inflation remaining low, the SNB retains room to ease if conditions warrant.