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Current unconventional policy measures will have to be unwound soon to avoid medium-term inflationary pressures as the economy recovers, Swiss National Bank Chairman Jean-Pierre Roth said on Tuesday.
"For several months, we have been observing signs of an economic recovery and the impression is growing that the crisis measures must soon be corrected in order to preserve price stability over the medium term," said Roth in a speech at the International Center for Monetary and Banking Studies in Geneva.
"The difficulty is to assess the right moment to approach this change of direction," he said.
Timing the exit from stimulus measures entails two risk scenarios, explained Roth. On the one hand, unwinding stimulus too soon could nip any form of sustainable recovery in the bud. However, if the central bankers wait too long, it could lead to inflationary problems in the next 18 to 24 months.
Meanwhile, the central bank chief dismissed calls to integrate banking supervision into central banks. "An institutional merger would lead to a greater political influence on central banks' decisions, something that is no guarantee of long-term monetary stability," said Roth, who leaves his post at the end of the year.
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