ZURICH (Reuters) -Swiss inflation is proving broader-based and more persistent than initially thought, Swiss National Bank Governing Board member Andrea Maechler said on Wednesday, reiterating the central bank’s commitment to fighting price rises.
Inflation had originally been triggered by oil price rises, supply chain disruptions and tight labour markets after the COVID pandemic, but had now spread other parts of the economy, Maechler said.
“Now we have clearly high inflation, it is more persistent than we anticipated initially,” she told an event at the International Institute for Management Development (IMD) in Lausanne.
“Over last 30 years usually about 20% of goods may have had price increase above 1%,” Maechler said. “Today in Switzerland over 65% of all goods and services are experiencing price rises.”
It had become easier for firms to raise prices, Maechler added.
Swiss inflation was 2.2% in May and has been above the SNB’s target range of 0-2% since February 2022. The central bank last week hiked its interest rates to their highest level in 15 years and signalled more increases were likely.
The market expects SNB to raise its interest rate to 2% from 1.75% at present when it makes its next monetary policy assessment in September, although Maechler on Wednesday declined to speculate on the SNB’s next move.
“How much more should the interest rate have to rise to tame this persistent inflation that we see? That’s the $10 million dollar question, I’m not going to answer it,” Maechler said.
Still, the central bank was determined to tackle inflation, she said, in what was her last public appearance before leaving the SNB.
“Too high inflation is poison for a society. It destroys trust in money and the basis for sound economic growth,” Maechler said.
“Ultimately you lose the trust and predictability and everyone loses.”
(Reporting by John Revill; Editing by Alex Richardson and Sandra Maler)