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SNB & CHF, the blog on a beleaguered central bank, its currency, on gold and astute investments

Over four years our association of supporters of Austrian Economics from Switzerland, Germany and Austria and helpful hands from all over the world expressed opposition against the CHF cap in in-numerous pages. Finally the SNB agreed to the wishes of Swiss consumers and gave up the cap that effectively represented a tax on consumption and extra-profits for companies and close friends of the central bank.

Swiss Inflation Watch: Swiss inflation 

As monetarists & Austrians we expect Swiss price inflation > Eurozone inflation in some time. The main driver will be the Swiss asset price boom that first will push up rents, later wages and finally price inflation. Yet inflation on Swiss rents is low, because of regulation (indexation to interest rates).

Swiss Yearly Money Inflation (M3) has slowed down from 8% to 3%
Swiss Price InflationFortunately still low: -1.4% y/y CPI and -1.2% HICP,
thanks to imported deflation from the euro zone, but internal inflation >0
Other HICPs Y/Y: Eurozone  (outright deflation) 1.1 0.9, 0.7,0.5 0.4% -0.2%  -0.1%
Germany (near deflation):+0.0%
Spain (outright deflation) 0.5 0.3, 0.2, 0.0% -0.5%,-0.2%  -0.9%
Italy (near deflation): 0.5 0.3, 0.2, 0.0-0.2 0.0% +0.2%

Economic Background:

Dr. Thomas Jordan, Chairman of Our Swiss National Bank, the leader for implementing price stability after far too many years of monetary expansion, said on November 23 2014 (in response to the gold referendum): 

Money is sound when it fulfils its functions as a means of payment and store of value as smoothly and reliably as possible in people’s everyday lives. Sound money retains its value and is generally accepted. It also makes an important contribution to social harmony and material prosperity. Sound money is therefore a central pillar of our society. The mandate of monetary policy is to ensure that money remains sound. Consequently, the Swiss National Bank bases all of its activities on this mandate. (source SNB)


Thomas Jordan
Thomas J. Jordan (born 1963) is a Swiss economist and banking supervisor. He is the chairman of the governing board of the Swiss National Bank, a member of the board of directors of the Bank for International Settlements, and a member of the steering committee of the Financial Stability Board. For The Guardian and many FX traders, Thomas Jordan is ‘the most hated man in foreign exchange’
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1 comment

  1. Stefan Wiesendanger

    The above Core Thesis is a very fitting analysis and a likely prediction as far as a continuing long-term upward trend of the CHF is concerned. I am less convinced however the Switzerland will not accept higher inflation as a way out since the SNB has already shown itself to be pragmatic in the face of extraordinary circumstances and when backed by the political and economic establishment. The all-important question is what kind of inflation it is going to be. Wage-driven inflation might look like an acceptable solution in the future while the credit-fueled variant will not (and is not necessary given the strength of the Swiss economy) and is therefore actively combated by the SNB. See the full comment

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