Swiss National Bank ready for more rate hikes after shock move

The Swiss National Bank (SNB) raised its policy interest rate for the first time in 15 years in a surprise move on Thursday and said it was ready to hike further, joining other central banks in tightening monetary policy to fight resurgent inflation.

US Fed hikes US interest rate 0.75 pp amid surging inflation

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The central bank increased its policy rate to -0.25 percent from the -0.75 percent level it has deployed since 2015, sending the safe-haven franc sharply higher. Nearly all the economists polled by Reuters had expected the SNB to keep rates steady.

It was the first increase by the SNB since September 2007, and followed a 0.75 percent rate hike by the US Federal Reserve on Wednesday.

The SNB also raised its inflation forecasts for 2022 to 2.8 percent from the 2.1 percent it gave in March. It also expects inflation of 1.9 percent and 1.6 percent in 2023 and 2024, up from its previous view for prices rising by 0.9 percent in both years.

’Further increase possible’

SNB Chairman Thomas Jordan said the inflation situation - with Switzerland seeing its highest price rises in nearly 14 years during May - meant the bank may have to act again.

“The new inflation forecast shows that further increases in the policy rate may be necessary in the foreseeable future,” he told a news conference.