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Swiss inflation rose to 0.7% in November, slightly up from 0.6% in October, driven by higher rents and clothing prices. The Swiss National Bank is expected to cut interest rates again on December 12, as inflation remains within its 0-2% target range, with further cuts anticipated by March. Economic concerns, particularly regarding Germany, and a strong franc contribute to the case for these rate reductions.
Switzerland's inflation rate rose slightly from 0.6% to 0.7% in November, yet disinflationary trends persist, with prices excluding rents increasing by only 0.1% year-on-year and imported goods prices falling by 2.3%. A 0.1% monthly decline in prices reflects lower costs in hospitality and vehicle sectors, while rents and air travel saw increases. The Swiss National Bank is expected to cut interest rates further in December, with potential for a zero or negative rate by December 2025 if inflation remains low.
Switzerland is experiencing economic challenges due to a slowdown in Germany, its largest trading partner, according to Swiss National Bank President Martin Schlegel. He noted that reduced demand from Germany's industrial sector is impacting Swiss exports, particularly in the automotive industry. As the Swiss franc strengthens, the central bank faces pressure to adjust interest rates, with further cuts likely as inflation remains below expectations.
Switzerland is experiencing economic challenges due to a slowdown in Germany, its primary trading partner, according to Swiss National Bank President Martin Schlegel. He noted that the decline in German industrial demand is significantly impacting Swiss industries, likening the situation to Germany having a cold while Switzerland suffers from the flu.
Martin Schlegel, a Swiss central banker, emphasized the need to increase equity at the Swiss National Bank (SNB) to mitigate risks associated with its large balance sheet, which currently stands at CHF840 billion. He indicated that prioritizing capital reserves over profit distributions to the government may lead to no payouts this year, following two years of skipped disbursements after a record loss in 2022. With inflation at just 0.6%, concerns arise about the potential for it to fall below the SNB's target range.
At a Zurich conference, SNB Chairman Martin Schlegel emphasized that building equity capital is a priority over profit distribution, highlighting the need for flexible monetary policy to maintain price stability amid global economic fluctuations. He noted that Switzerland's inflation target is set between 0 and 2 percent, allowing the SNB to respond effectively to external shocks while addressing the challenges posed by a low equity capital situation. Schlegel affirmed that the central bank's policies have successfully supported the Swiss economy's resilience in the face of inflation and deflation risks.
Swiss National Bank President Martin Schlegel has stated that the bank's equity is currently insufficient to cover the risks associated with its large balance sheet. He emphasized the need to prioritize strengthening the central bank's capital base over profit distribution to the government and cantons.
Antoine Martin, Vice-Chairman of the Swiss National Bank (SNB), stresses the importance of banks holding sufficient collateral to prepare for crises, supporting the Federal Council's proposals to enhance too-big-to-fail regulations. He emphasizes the need for strong relationships with the Financial Market Supervisory Authority and the Federal Council to ensure financial stability. Regarding the Swiss Franc, Martin expresses a calm outlook, indicating that recent developments are neither surprising nor problematic, while hinting at potential future interest rate cuts.
The Riksbank in Sweden is urging institutions to accept cash as its availability declines, while Switzerland faces a similar trend with a failed cash initiative and a proposed constitutional safeguard for cash supply. The Swiss National Bank reports a significant drop in cash transactions, with debit cards and apps overtaking cash payments, particularly in rural areas where access to cash is diminishing.
Martin Schlegel
People
The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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