SNB's Maechler: To continue hikes if we see inflation projections above target

Ladies and gentlemen It is with great pleasure that my colleague Thomas Moser and I welcome you to this year’s Swiss National Bank (SNB) Money Market Event in Geneva. We are very glad that so many of you have joined us this evening, be it on site or remotely. Since we last met in this setting a year ago, fighting inflation has become the most important task for central banks worldwide. Many countries have experienced a surge in inflation, the scale and pace of which very few anticipated. A large part of this surge was due to ongoing disruptions to global supply chains caused by the coronavirus pandemic. Russia’s war against Ukraine – in addition to causing immense human misery – has further contributed to inflationary pressures through its impact on energy and food prices. Over recent months, inflation has proved more persistent and become more broad-based than had initially been expected. Consequently, we have witnessed a turnaround in monetary policy at a global level as central banks have begun to tighten their policies. The SNB, too, has tightened its monetary policy and has lifted its policy rate back into positive territory. With the transition to a positive rate environment, the SNB has had to adopt a new approach to implementing its monetary policy in the money market. Our new approach features two elements: reserve tiering, also referred to as tiered remuneration of reserves, and reserve absorption by way of open market operations.1 This new approach takes into account the structural changes that have occurred in the money market since we were last in a positive rate environment. In particular, under these changed conditions, the new approach allows us to pursue our objective of keeping secured short-term Swiss franc money market rates close to the SNB policy rate. Tonight’s event offers an excellent and t tweet at 12:31pm: SNB'S MAECHLER: INFLATION IS MORE PERSISTENT AND WIDESPREAD THAN PREVIOUSLY THOUGHT. tweet at 12:31pm: SNB'S MAECHLER: THE FX-SWAP-MARKET TRANSMISSION IS NOT YET COMPLETE.

tweet at 2:26pm: FED'S KASHKARI: WE CANNOT BE OVERLY PERSUADED BY ONE MONTH'S DATA FED'S KASHKARI: NEED TO STAY AT IT UNTIL AT LEAST SURE INFLATION HAS STOPPED CLIMBING KASHKARI: CPI, PPI GIVE SOME EVIDENCE THAT INFLATION IS PLATEAUING tweet at 2:26pm: KASHKARI: ONCE WE ARE CERTAIN THAT INFLATION HAS STOPPED CLIMBING, WE CAN STOP RATE HIKES || WE ARE NOT THERE YET tweet at 2:28pm: FED'S KASHKARI: INFLATION STATISTICS WILL DECIDE THE RATE PATH, NOT SEEING MUCH EVIDENCE OF COOLING IN THIS ROOM. tweet at 2:28pm: FED'S KASHKARI: I'M HESITANT TO PREDICT AN END TO RATE HIKES UNTIL WE SEE EVIDENCE THAT UNDERLYING DEMAND IS MODERATING.