The Swiss National Bank (SNB) offices ahead of the bank’s rate announcement news conference in Zurich, Switzerland, on Thursday, March 23, 2023.
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The Swiss National Bank opted for a smaller rate hike at its quarterly monetary policy meeting Thursday, but said further rises may be needed to bring inflation to target.
The SNB announced a 25 basis point hike, taking its policy rate to 1.75%, in line with expectations.
It is the fifth consecutive hike since it began pulling rates out of negative territory in June 2022, though it had previously enacted 50-basis-point rises.
Inflation in Switzerland eased to 2.2% in May from 2.6% in April, putting it well below its neighbors in the euro zone, where inflation averages 6.1%.
However, the SNB said in a statement that it was “countering inflationary pressure, which has increased again over the medium 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 central bank said, adding that it would take action in the foreign exchange market as necessary and focus on selling foreign currency to ensure monetary stability.
Though the SNB early last year sought to dampen the rise of the Swiss franc as it gained amid market volatility, it is now targeting foreign currency sales to boost its value in an effort to bring down the cost of imports.
The SNB has been in the spotlight in recent months for its role in facilitating the emergency takeover of Credit Suisse by UBS.
