According to the Swiss National Bank, additional interest rate hikes should not be ruled out in the mid to long term.
The apex bank of Switzerland, the Swiss National Bank (SNB) has announced its latest interest rate hike by 50 basis points or 0.5%. According to the press release published by the SNB earlier today, the benchmark interest rate is now pegged at 1.5% in what the regulator tagged as its attempt to stem the soaring inflation rate.
“The SNB is tightening its monetary policy further and is raising the SNB policy rate by 0.5 percentage points to 1.5%. In doing so, it is countering the renewed increase in inflationary pressure,” the regulator said in a statement.
Inflation in Switzerland has been a major source of concern, however, it has remained relatively lower than some of its counterparts in the European Union. Inflation in Switzerland as of February was pegged at 3.4% and the policy change followed the expectations of analysts.
The rate hike comes as the fourth consecutive jump following the first-ever hike back in June last year. The hike at the time represented the first-ever move in that regard since 2007. With the current outlook, The SNB now expects inflation to bottom around 2.6% in 2023. It also projects that the inflationary growth will not exceed 2% for the 2024 and 2025 financial years. Should it meet this target, it will fall within the 0 – 2% range it sets as its benchmark.
The SNB said it will be more committed to active market operations via its foreign exchange involvement.
“To provide appropriate monetary conditions, the SNB also remains willing to be active in the foreign exchange market as necessary. For some quarters now, the focus has been on selling foreign currency,” the statement reads.
Swiss National Bank and Further Hikes
According to the Swiss National Bank, additional interest rate hikes should not be ruled out in the mid to long term.
“It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term,” the SMB said.
Its determination to stem inflation has led the firm to approach the financial crisis that rocked Credit Suisse Group AG (SWX: CSGN) which was acquired for $3.25 billion by its top rival UBS Group AG (SWX: UBSG).
While the general expectation was that the Swiss National Bank will adopt a dovish move toward its interest rate hike to let corporations heal, it said it is supporting the bank with enough cash or liquidity injection.
“The past week has been marked by the events surrounding Credit Suisse. The measures announced at the weekend by the federal government, FINMA and the SNB have put a halt to the crisis. The SNB is providing large amounts of liquidity assistance in Swiss francs and foreign currencies. These loans are backed by collateral and subject to interest,” it said.
Per current realities, SNB has all things figured out and it expects its rate hikes to start yielding fruits in due time.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
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