Swiss National Bank (SNB), the central bank of Switzerland.
STOFF COFFRINI | AFP | Getty pictures
The Swiss National Bank raised its key interest rate for the first time in 15 years on Thursday, and together with other central banks tightened monetary policy to fight inflation again and send the safe haven franc up sharply.
The central bank raised the key interest rate to -0.25% from the -0.75% level it has entered since 201[ads1]5. The increase was the first increase from SNB since September 2007.
The movement followed a 0.75% rate hike by the US Federal Reserve on Wednesday, while the European Central Bank signaled last week that it would raise interest rates in July to control rising eurozone inflation, which reached 8.1% last month.
“Tighter monetary policy aims to prevent inflation from spreading wider to goods and services in Switzerland. It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilize inflation in the area in line with prices. stability in the medium term, it says in a statement.
“To ensure appropriate monetary conditions, SNB is also willing to be active in the foreign exchange market as needed.”
The strength of the secure franc has dampened the impact of inflation in Switzerland by reducing fuel and food import prices.
Nevertheless, the SNB raised its inflation forecast for 2022 to 2.8% from the 2.1% it provided in March. It also expects inflation of 1.9% and 1.6% in 2023 and 2024, based on previous views that prices will rise by 0.9% in both years.
SNB still expects the Swiss economy to grow by around 2.5% in 2022.