(Bloomberg) — Global wage pressure and a greater willingness by companies to charge consumers more means that getting inflation back to 2% won’t be easy, said Swiss National Bank President Thomas Jordan.
(Bloomberg) — Global wage pressure and a greater willingness by companies to charge consumers more means that getting inflation back to 2% won’t be easy, said Swiss National Bank President Thomas Jordan.
“When we will see a weakening of the economy, under normal circumstances that should help to bring inflation in down, but we should not underestimate the second-round effects that are already on the way,” he said on Friday in Davos. “What we see everywhere, also in Switzerland, is a little bit a change in the way firms are dealing with price increases. So they do not hesitate anymore to increase their prices.”
Jordan’s remarks to a panel on monetary policy at the World Economic Forum widened the scope beyond Switzerland of his comments on Thursday about a change the SNB has seen in price-setting behavior.
His central bank’s concern on inflation drove policy makers to unexpectedly raise interest rates as early as June, before officials did so in the neighboring euro region.
The SNB chief also shared his worry on pay with the Davos audience.
“Once inflation is high, the pressure coming from wages is here,” he said. “This is probably also the proof that it will be not that easy really to bring everywhere inflation down quickly.”
Falling energy costs will have a swift effect, Jordan said. Even so, central banks won’t have an easy time.
“Core inflation is not coming down as quickly as that, so it will be much more difficult to bring inflation from 4% to 2%,” he said.
–With assistance from Jana Randow.
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