UBS CEO tells paper he’s not convinced inflation is under control

UBS CEO Sergio Ermotti attends the 2019 New Economy Forum in Beijing, China November 21, 2019. REUTERS/Jason Lee/File Photo Acquire Licensing Rights

The chief executive of Swiss banking giant UBS, Sergio Ermotti, is not convinced central banks have got inflation under control, he said in a newspaper interview published on Sunday.

Federal Reserve Chair Jerome Powell said last week that interest-rate increases were likely over in the United States and lower rates were coming into view but central banks have stuck to plans to keep policy tight well into next year.

Seven sources told Reuters the European Central Bank would need to see how inflation and other data pan out between now and, at the earliest, its March 7 meeting before considering the kind of “dovish” pivot the Fed performed.

“One thing I’ve learned is that one must not try to make predictions on the coming months - it’s nearly impossible. That said, at this stage I am still not convinced that inflation is really under control,” Ermotti told Swiss newspaper Le Matin Dimanche when asked about the economic outlook.

 “The trend seems favourable but we must see if it continues. If inflation approaches the 2% targets in all major economies, central banks’ policies could loosen a bit. In this environment, it is very important to remain agile,” he added.

UBS has said it will slash 3,000 jobs in Switzerland to cut costs following its takeover of Credit Suisse - the biggest bank merger since the global financial crisis, orchestrated by the Swiss state to avert Credit Suisse’s collapse.

 “We will do our best, based on a principle of meritocracy. Use retirements, early retirements, natural departures. Three thousand people at Credit Suisse did not commit errors, no doubt far fewer,” Ermotti said.

“In fact, the hardest part will be making these choices, firing people who are in no way responsible for what happened,” he added.