The head of the SNB is obviously quite sure that there will be no domestic inflation drivers that could act independently of exchange
rate developments. No wage-price spirals or the like. He is brimming with optimism. Understandable given the fact that Switzerland has largely missed out on the global inflation shock (figure below), but a little worrying coming from someone whose job it should be to sniff out inflationary dangers everywhere.
(2.) Surprisingly high inflation is usually correlated with an appreciation of the respective currency, because the foreign exchange market assumes that an undesirably high level of inflation will be met with an even larger reaction from interest rate policy. In economist-speak,
this is known as active monetary policy. This is what the SNB has been doing in recent years (at least with regard to the medium-term inflation outlook).
(3.) In context, Jordan's statement appears different from what the thin lines above suggest. The sentence quoted above was preceded
by a discussion of the risks of the March rate cut. Jordan was discussing what would happen if the rate cut would turn out to be wrong. FX interventions remain — it seems to me — a monetary policy instrument for emergencies: for times when expansionary interest rate policy hits the interest rate floor, or when restrictive interest rate policy is not sufficient or has been applied too late. - Commerzbank
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