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SNB WATCH: SNB Hikes 50Bps, Says More Tightening Possible


The Swiss National Bank raised its policy rate to 1% from 0.5% on Thursday and slightly boosted its medium-term inflation forecast, signalling also that it could hike more if necessary and remains willing to use the exchange rate as necessary to counter price pressures.

Average inflation is expected to reach 2.9% this year before falling to 2.4% in 2024 - the same level seen in September’s forecast. However the figures for 2024 and 2025 were both revised up by 0.1 percentage point, to 1.8% and 2.1%, respectively.

The Swiss economy grew by some 2% in 2022, but growth is expected to drop to around 0.5% next year as a result of weaker foreign demand and high energy prices.

Additional increases in the SNB’s policy rate “cannot be ruled out,” chairman Thomas Jordan told reporters, with current forecasts indicating that the current stance “does not guarantee that price stability is ensured.” The SNB is adopting a meeting-by-meeting approach, he said, rather than targeting a specific peak rate.

The latest hike came after September’s 75bps increase and a 50bps increase in June, and Jordan said the policy rate remains the SNB’s primary instrument. (see MNI INTERVIEW: December Hike May Be SNB's Last - Ex-Staffer).

The bank remains willing to be intervene in the foreign exchange market as necessary in both directions, and does not have a quarterly currency sales target.

MNI Frankfurt Bureau | +49-69-720-146 |
MNI Frankfurt Bureau | +49-69-720-146 |

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