The Swiss national flag hangs from the Federal Palace, Switzerland’s parliament building, in Bern, Switzerland, on Thursday, Dec. 13, 2018. The Swiss National Bank cut its inflation forecast and showed no inclination of moving off its crisis-era settings, citing the francs strength and mounting global risks. Photographer: Stefan Wermuth/Bloomberg via Getty Images
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The Swiss National Bank raised its benchmark interest rate by 50 basis points Thursday, taking it to 1.5%.
The rate is the fourth consecutive hike and the change in policy rate is in line with analyst expectations.
The additional monetary tightening has been put in place to counter “the renewed increase in inflationary pressure,” the bank said in a press release.
It also said further rises “cannot be ruled out … to ensure price stability over 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 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 rose to 3.4% in February year-on-year, exceeding analyst expectations, although consumer prices are just a fraction of the soaring rates of the country’s European neighbors.
The country’s interest rates first moved out of negative territory in September, with the Swiss central bank having surprised markets in June when it hiked rates for the first time since 2007.
The Swiss National Bank had hinted there could be further rate hikes on the horizon if inflationary pressures continued.
“It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term,” a press release from the central bank said in December.
“To provide appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market as…
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