SNB's Schlegel Warns Inflation Pressure Is Building Again

Swiss National Bank Chairman Martin Schlegel says the heat is back on prices. Speaking Tuesday at the SNB's economic meeting in St. Galen, he flagged that inflationary pressure has climbed above where it sat in the second quarter of the year.

The timing is no accident. Hours earlier, Switzerland reported annual inflation of 1.5%, up from the month before — a fresh reading that lands right as Schlegel was talking about rising price pressure.

Growth is a different story. Schlegel expects Switzerland to chalk up only a modest GDP gain in the third quarter, a step down after a strong showing in the prior period.

His remarks arrive in a busy week for European economic data. Neighboring economies have been posting their own third-quarter numbers — Germany managed 0.2% quarterly growth, Spain 0.6%, Italy was basically flat, and the Eurozone grew 0.4%, according to Eurostat's first estimate.

For the SNB, the mix matters: firmer inflation and softer growth give policymakers a trickier puzzle to solve heading into the rest of the year. All eyes now turn to the next Swiss inflation print and any signals from the central bank on where rates go from here.