The Swiss national flag hangs at the Federal Palace, the Swiss parliament building, in Bern, Switzerland, Thursday, Dec. 13, 2018. The Swiss National Bank cut its inflation forecast and showed no intention of exiting its crisis parameters, citing the strength of the franc and rising global risks. Photographer: Stefan Wermuth/Bloomberg via Getty Images
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The Swiss National Bank raised its key rate by 50 basis points on Thursday, bringing it to 1.5%.
The rate is the fourth consecutive hike and the change in the key rate is in line with analysts’ expectations.
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The additional monetary tightening was put in place to counter “the further increase in inflationary pressures”, the bank said. in a press release.
He also said that further increases “cannot be ruled out…to ensure price stability in the medium term.”
Average annual inflation will average 2.6% in 2023 and 2% in 2024 and 2025, according to a new forecast by the Swiss National Bank, with inflation expected to stand at 2.1% by the end of the year. end of 2025.
The latest rate hike comes as domestic inflation remains well above the Swiss National Bank’s target of between 0% and 2%.
Swiss inflation reached 3.4% in February over one year, exceeding analysts’ expectationsalthough consumer prices are only a fraction of the rates the country’s European neighbors.
The country’s interest rates broke out of negative territory for the first time in September, as the Swiss central bank surprised markets in June when it rate hike for the first time since 2007.
The Swiss National Bank had hinted that there could be further rate hikes on the horizon if inflationary pressures continue.
“It cannot be ruled out that further increases in the SNB’s key interest rate will be necessary to ensure price stability in the medium term,” said a press release from the Swiss National Bank. the central bank said in December.
“To provide appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market if necessary,” he added.
The Swiss National Bank was in the global spotlight last week after agreeing to lend to Credit Suisse up to 50 billion Swiss francs ($53.68 billion). Shares of the lender had fallen news that its largest investor, the Saudi National Bank, would no longer provide financial assistance.
The result liquidity lifeline and takeover of UBS came after a tumultuous series of scandals and losses for Swiss credit.