The Swiss National Bank raises interest rates again.
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The Swiss National Bank raised its benchmark interest rate for the third time this 12 months on Thursday, bringing it to 1%.
The central bank said it intended to counter “increased inflationary pressures and further inflation spread” with this move.
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Inflation within the country stays well above the Swiss National Bank’s goal of 0-2%, but is noticeably below the soaring rates of neighboring European countries. Switzerland’s inflation rate held regular at 3% last month, coming down from a three-decade high of 3.5% in August.
The central bank’s 50 basis point hike on Thursday got here after it unexpectedly raised its key rate in June for the primary time in 15 years, taking it from -0.75% to -0.25%. It then entered positive territory with a gain of 75 basis points on September 22.
And there could also be more hikes on the horizon.
“It can’t be ruled out that additional increases within the SNB’s key interest rate will probably be mandatory to ensure price stability within the medium term,” reads the central bank’s press release.
“To make sure appropriate monetary conditions, the SNB can also be willing to be energetic within the foreign exchange market if mandatory,” he added.
Global slowdown
In announcing the newest interest rate hike, the Swiss National Bank drew attention to the worldwide slowdown in growth and the indisputable fact that inflation is “well above” central bank targets in lots of countries – and it doesn’t expect that to change any time soon.
“The SNB expects this difficult situation to proceed in the intervening time. Global economic growth is probably going to be weak in the approaching quarters, with inflation remaining elevated in the intervening time.
Nevertheless, the bank expects inflation to stabilize at a more moderate level within the medium term as countries tighten monetary policy further.
Charlotte de Montpellier, senior economist at ING, noted that the Swiss National Bank’s combined 175 basis point increase in 2022 is comparable to an expected increase of 250 basis points within the Eurozone and a rise of 425 basis points within the US