SNB ups rates to stop broadening of inflation pressures from goods to services, see further hikes ahead.
The Swiss National Bank raised interest rates by 50 bps Thursday, putting the benchmark policy rate at -0.25%. The move was of a greater magnitude than many expected, with analysts largely split between unchanged an a 25 bps hike. Further hikes in rates could not be ruled out 'in the foreseeable future', the SNB's statement said.
Citing increased inflationary pressure, the central bank said the rate hikes were aimed at preventing a broadening of prices rises from goods to services.
The SNB's new inflation forecast for the next three years is above that of March, standing at 2.8% for 2022, 1.9% for 2023, and 1.6% for 2024 . Without the policy rate increase, the inflation forecast would be significantly higher, the bank said.