The Swiss National Bank (SNB) once again further supports its monetary policy with an increase in its reference rate by 50 basis points, from 1% to 1.5%, in a decision that comes after the bailout last Sunday of Credit Suisse by UBS with government and central bank backing.
“In doing so, it is counteracting the renewed increase in inflationary pressure. It cannot be ruled out that further increases in the SNB’s policy rate are necessary to ensure price stability in the medium term. To provide appropriate monetary conditions, SNB tea continues willing to be active in the foreign exchange market as necessary. For some quarters, the focus has been to sell foreign currencies,” he explained in the agency in his statement on Thursday.
The rate change will be applied this Friday, March 24, 2023, at an undetermined level, it will be remunerated at 1%, 0.5 percentage points less than the reference rate.
Last week was marked by events surrounding Credit Suisse foreign currencies. These loans are backed by collateral and are subject to interest,” claims the central bank chaired by Thomas Jordan.
According to the SNB, inflation has risen again since the beginning of the year and stood at 3.4% in February. “Therefore, it remains clearly above the range that the SNB associates with price stability. The latest rise in inflation is mainly due to higher prices for electricity, tourism services and food. However, the price increases are now more widespread,” he explains in his report.
The second-round effects have grown “stronger and the fact that inflationary pressure from abroad has risen again” means that, despite the SNB’s policy rate hike, the new forecast is higher until mid- 2025 than in December. The new forecast places average annual inflation at 2.6% for 2023 and 2.0% for 2024 and 2025. At the end of the forecast horizon, inflation stands at 2.1%. Without today’s policy rate hike, the inflation forecast would be even higher in the medium term.