Swiss Price Dip Sparks Central Bank Speculation

Swiss consumer prices fell for the third consecutive month in October, prompting discussions about the potential use of negative interest rates by the Swiss National Bank. Key markdowns included hotel stays and rental vehicles. The Swiss franc weakened against the euro, highlighting concerns over persistently low inflation.

In October, Swiss consumer prices experienced a third consecutive monthly decline, raising questions about the country's central bank potentially introducing negative interest rates to curb deflation.

The Swiss Federal Statistical Office reported significant price reductions in hotel stays, package holidays abroad, and rental vehicles. October's consumer prices fell by 0.3% month-on-month, following prior declines of 0.2% and 0.1%, with a marginal year-on-year increase of 0.1%—barely within inflationary limits.

Petra Tschudin from the Swiss National Bank's governing board indicated the bank might accept sub-zero inflation temporarily, hinting at the possible need for negative rates to tackle ongoing low inflation. The Swiss franc's dip against the euro underscores concerns over SNB's monetary strategies and the impact on savers, recalling the previous negative rate period from 2014 to 2022.

(With inputs from agencies.)