Swiss National Bank (SNB), the central bank of Switzerland.
COFFRINI FABRIC | AFP | Getty Images
The Swiss National Bank on Thursday raised its political interest rate for the first time in 15 years, joining other central banks in tightening monetary policy to fight the resurgence of inflation and raise the refuge franc for sure.
The central bank increased its policy rate to -0.25% from the level of -0.75% it has deployed since 2015. The rise was the SNB’s first increase since September 2007.
The move came after a 0.75% rate hike by the US Federal Reserve on Wednesday, while the European Central Bank said last week that it would raise rates in July to control the rise in inflation in the euro area, which reached 8.1% last month.
“The most restrictive monetary policy is to prevent inflation from spreading more widely to goods and services in Switzerland. It cannot be ruled out that further increases in the SNB’s policy rate will be needed in the foreseeable future to stabilize inflation in a price-consistent range, medium-term stability, “he said in a statement.
“To ensure proper monetary conditions, the SNB is also willing to be active in the foreign exchange market when necessary.”
The strength of the free shelter has mitigated the impact of inflation in Switzerland by reducing rising prices for fuel and food imports.
However, the SNB raised its inflation forecast for 2022 to 2.8% from 2.1% in March. It also predicts inflation of 1.9% and 1.6% in 2023 and 2024, more than its previous view of raising prices by 0.9% in both years.
The SNB still expects the Swiss economy to grow by around 2.5% by 2022.