The Swiss Central Bank has surprised investors by raising interest rates for the first time in over a decade.
On Thursday, the Swiss National Bank hiked its interest rates for the first time in fifteen years, joining global central banks in tightening monetary policy to combat surging inflation and driving the sheltered franc higher.
The central bank adjusted its policy rate from -0.75 percent to -0.25 percent, the highest level since 2015.
The SNB raised the rate for the first time since September 2007.
The move came after the US Federal Reserve raised interest rates by 0.75 percent on Wednesday, and the European Central Bank said last week that it will raise rates in July to combat rising inflation in the eurozone, which topped 8.1 percent last month.
“The stricter monetary policy is intended to keep inflation from spreading to commodities and services in Switzerland.” “It cannot be ruled out that further hikes in the SNB policy rate will be required in the near future to stabilize inflation in the range consistent with medium-term price stability,” it said in a statement.
“The SNB is also willing to be involved in the foreign exchange market if needed to provide proper monetary conditions.”
The strength of the relatively secure franc has reduced the impact of inflation in Switzerland by lowering fuel and food import prices.
Nonetheless, the SNB boosted its inflation forecasts for 2022 from 2.1 percent in March to 2.8 percent. It also forecasts 1.9 percent and 1.6 percent inflation in 2023 and 2024, respectively, up from its previous forecast of 0.9 percent inflation in those years.
The Swiss National Bank (SNB) continues to forecast a 2.5 percent growth rate for the Swiss economy in 2022.
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