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MNI STATE OF PLAY: SNB Hikes to +0.5%, Adds Reverse Tiering

(MNI) London

The Swiss National Bank takes rates positive, hiking its key rate by 75bp, as inflation pressures continue.

The Swiss National Bank raised its policy rate by 75bp to 0.5% on Thursday, with the expected move taking it into positive territory for the first time in almost a decade, but limited its interest payments to banks, announcing that sight deposits above individually-determined thresholds will be remunerated at zero percent.

Hikes were needed to counter a “renewed” rise in upward price pressures and the spread of inflation to previously less-affected goods and services, chairman Thomas Jordan said, with the bank predicting inflation of 3% for 2022, 2.4% for 2023 and 1.7% for 2024, assuming the current policy setting is maintained, compared with the 0-2% target range.

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The Swiss National Bank raised its policy rate by 75bp to 0.5% on Thursday, with the expected move taking it into positive territory for the first time in almost a decade, but limited its interest payments to banks, announcing that sight deposits above individually-determined thresholds will be remunerated at zero percent.

Hikes were needed to counter a “renewed” rise in upward price pressures and the spread of inflation to previously less-affected goods and services, chairman Thomas Jordan said, with the bank predicting inflation of 3% for 2022, 2.4% for 2023 and 1.7% for 2024, assuming the current policy setting is maintained, compared with the 0-2% target range.

Keep reading...Show less