2023-09-21 08:36:11
After five interest rate increases in a row, the Swiss National Bank (SNB) is surprisingly refraining from further tightening monetary policy. The SNB key interest rate will remain at 1.75 percent, the central bank announced on Thursday. At the same time, the monetary authorities are keeping the door open for further interest rate increases.
“The monetary policy, which has been significantly tightened over the last few quarters, counteracts the inflationary pressure that is still present,” explained the central bank. “From today’s perspective, it cannot be ruled out that further tightening of monetary policy may be necessary in order to ensure price stability in the medium term.”
The majority of economists surveyed by Archyde.com ahead of the SNB’s quarterly monetary policy assessment had forecast an interest rate increase of 0.25 percentage points. The day before, the US Federal Reserve also refrained from raising interest rates further and left its key rate unchanged, but at the same time signaled that interest rates would remain tight. The European Central Bank (ECB) raised interest rates for the tenth time in a row last week and wants to keep them high for as long as necessary to curb inflation.
In order to ensure appropriate monetary conditions, the central bank wants to continue to intervene in the foreign exchange market if necessary. In the current environment, the focus is on foreign currency sales. In addition to interest rate increases, the SNB recently also relied on the inflation-dampening effect of a strong franc.
However, following the surprising break in interest rates, the Swiss currency headed for its biggest daily loss once morest the euro since the banking turmoil in March, in which the ailing Credit Suisse was taken over by rival UBS. The euro rose by 0.7 percent to 0.9651 francs. The dollar appreciated by 0.9 percent to 0.9066 francs.
The pressure on the SNB board of directors to combat inflation has recently decreased. Annual inflation in Switzerland is moderate by international comparison and has been within the SNB’s target range for the past three months: in August it was 1.6 percent. The central bank aims for price stability between zero and two percent. The monetary authorities announced that they would closely monitor the development of inflation in the coming months. As in June, they expect inflation of 2.2 percent for the entire year. In 2024, consumer prices are also expected to rise by 2.2 (previously: 2.2) percent and then by 1.9 (previously: 2.1) percent in 2025.
The SNB estimates the growth prospects to be stable and is sticking to its forecast from June: gross domestic product (GDP) is expected to rise by around one percent this year.
1695286503
#Swiss #central #bank #leaves #key #interest #rate #unchanged
