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Updated December 17th, 2023 at 20:59 IST

UBS Chief questions central banks' grip on inflation

Ermotti notes the challenge in predicting the economy, highlighting the current positive trend and suggesting central banks may ease policies.

Business Desk
Canada's inflation declines to 3.1%
Inflation | Image:Freepik

UBS CEO Sergio Ermotti expressed scepticism about central banks effectively managing inflation in a recent interview published on Sunday. Despite Federal Reserve Chair Jerome Powell's announcement of a likely cessation in interest-rate increases in the US, Ermotti remains unconvinced that inflation is under control. While Powell hinted at lower rates ahead, other central banks are maintaining plans for tight monetary policies into the next year.

Ermotti, speaking to Swiss newspaper Le Matin Dimanche, emphasised the difficulty of predicting the economic outlook in the coming months. He acknowledged the current favourable trend but emphasised the need to observe if it continues. Ermotti suggested that if inflation approaches the 2 per cent target in major economies, central banks might consider easing their policies. He highlighted the importance of being flexible in such an environment.

Regarding UBS's cost-cutting measures following its merger with Credit Suisse, Ermotti announced plans to eliminate 3,000 jobs in Switzerland. This merger, orchestrated by the Swiss state to prevent Credit Suisse's collapse, is the most significant bank merger since the global financial crisis. Ermotti assured that the job cuts would be implemented based on meritocracy, utilising retirements, early retirements, and natural departures. He acknowledged the difficulty of making choices and emphasised that many affected employees were not responsible for the circumstances leading to the job cuts.

(With Reuters Inputs)

Published December 17th, 2023 at 20:59 IST

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