Swiss National Bank Announces Smaller Rate Hike, Further Rises Possible
The Swiss National Bank (SNB) decided on a smaller rate hike during its quarterly monetary policy meeting on Thursday, but mentioned the possibility of further increases to reach its inflation target.
SNB revealed a 25 basis point hike, moving its policy rate to 1.75%, which was in line with expectations. Inflation in Switzerland dropped to 2.2% in May from 2.6% in April, significantly lower than its eurozone neighbors, where the average inflation is 6.1%.
In a statement, the central bank explained that it is “countering inflationary pressure, which has increased again over the medium term.” The SNB also mentioned that “it cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term.”
As part of its strategies, the bank will take action in the foreign exchange market as needed, focusing on selling foreign currency to maintain monetary stability.