(Bloomberg) -- A weaker franc is currently the most likely source of higher Swiss inflation, central bank president Thomas Jordan said, after the currency dropped to its weakest level in more than a year.

The Swiss National Bank could counteract this by “selling foreign exchange,” he added, speaking on Thursday in Seoul at a conference of the Bank of Korea. 

Jordan said that a rise in the natural rate of interest — or “r*” — also poses a risk to the consumer-price outlook. The SNB estimates this gauge is around 0% in Switzerland at the moment, he said.

“There are currently reasons to believe that r* has increased somewhat, or might rise over the coming years,” he said. “We view this as a small upward risk to the inflation forecast.”

Policymakers at Switzerland’s central bank in March delivered the first interest-rate cut of a Group-of-10 institution in this cycle, preempting global peers. It’s expected to reduce borrowing costs again at the next policy decision on June 20.

The franc has been on the decline since the beginning of 2024, recently reaching its weakest level against the euro since April of last year. 

For five weeks in a row, also the amount of cash commercial banks hold with the SNB has dropped, which could signal that the central bank is already selling foreign exchange.

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