The Swiss National Bank hikes rates of interest again.
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The Swiss National Bank increased its benchmark rate of interest Thursday for the third time this yr, taking it to 1%.
The central bank said it was trying to counter “increased inflationary pressure and an extra spread of inflation” with the 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 remained regular at 3% last month, having dropped from a three-decade high of three.5% in August.
The central bank’s 50 basis point hike Thursday got here after it unexpectedly raised its policy rate of interest for the primary time in 15 years in June, taking it from -0.75% to -0.25%. It then entered positive territory with a 75 basis point increase on Sep. 22.
And there could possibly be further hikes on the horizon.
“It can’t be ruled out that additional rises within the SNB policy rate might be vital to make sure price stability over the medium term,” a press release from the central bank said.
“To offer appropriate monetary conditions, the SNB can be willing to be lively within the foreign exchange market as vital,” it added.
In announcing its latest rate hike, the Swiss National Bank noted the worldwide slowdown in growth and that inflation is “markedly above” central banks’ targets in lots of countries — and it doesn’t expect this to alter any time soon.
“The SNB expects this difficult situation to persist for now. Global economic growth is prone to be weak in the approaching quarters, and inflation will remain elevated in the interim,” the press release said.
Within the medium term, nevertheless, the bank expects inflation to settle at more moderate levels as countries proceed to tighten monetary policy.
Charlotte de Montpellier, senior economist at ING, noted that the Swiss National Bank’s total increase of 175 basis points in 2022 compares to an expected 250 basis-point increase within the eurozone and a 425 basis-point hike within the U.S.