Swiss Central Bank Governor Highlights Inflation Uncertainty Amid Middle East Conflict

Swiss Central Bank Governor Schlegel stated on Wednesday that the uncertainty surrounding Switzerland's inflation outlook is 'quite high,' emphasizing the need to closely monitor the impact of the Middle East conflict on potential second-round inflation effects. According to Jin10, Schlegel noted that the rise in energy costs due to the Middle East conflict likely represents a supply shock. 'However, it is crucial to closely observe second-round effects. If signs of such effects and excessive inflation emerge, central banks should act promptly and decisively,' Schlegel remarked. Schlegel reviewed the Swiss National Bank's latest monetary policy decision from March, when the bank maintained its benchmark interest rate at zero while slightly raising this year's inflation forecast to 0.5%. He also pointed out that the Swiss National Bank's latest projections indicate that inflation will remain within the 0% to 2% target range until 2028. 'Clearly, the uncertainty surrounding this inflation forecast is quite high at present. Therefore, given the Middle East conflict, our willingness to intervene in the foreign exchange market has increased,' Schlegel stated.