– The policy rate has been raised
This decision follows the tightening of the institution’s monetary policy started in June this year.
The Swiss National Bank (SNB) continued the tightening of its monetary policy initiated since June, raising its key rate once once more on Thursday. The issuing institution will also continue to intervene on the foreign exchange market as needed. Further hikes may be needed to fight inflation, the SNB warned.
The Swiss central bank raised its key rate by 50 basis points (bps) to 1.0%, once morest another 0.5% in September.
If needed
The SNB “thus counters the increased inflationary pressure and a spread of inflation to other goods and services”, she explained in a press release, adding “that it is not excluded that further rate hikes will be necessary to ensure price stability in the medium term.
The issuing institution also declared that it was ready to “be active on the foreign exchange market if necessary in order to guarantee appropriate monetary conditions”.
According to SNB President Thomas Jordan, “inflation has come down somewhat,” from 3.3% in September to 3.0% in October and November. This decline is mainly due to the slowdown in the rise in the price of petroleum products.
Currency purchases and sales
The acceleration in prices “remains well above the range that we equate with price stability”, and that the SNB defines between 0% and 2%, continued Thomas Jordan, according to the text of his speech. For the leader of the SNB, prices should “remain relatively high” initially.
For this year, the SNB expects an inflation rate of 2.9%, once morest another 3.0% in its previous estimates. It should fall to 2.4% in 2023 and 1.8% in 2024. Without the monetary tightening implemented since June by the Swiss central bank, “our inflation forecast would be at an even higher level in the medium term “Warned Thomas Jordan, adding that it was” too early to let our guard down.
“There is a risk that inflation in Switzerland will remain at a relatively high level in the medium term due to second-round effects”, ie wage increases which would weigh on prices, added Thomas Jordan.
The rise in the value of the franc, which has appreciated by 4% since the start of the year, has nevertheless made it possible to limit imported inflation and curb prices in Switzerland. The SNB thus sold currencies to support the Swiss currency. She remains willing to repeat this operation if necessary, insisted Thomas Jordan. Conversely, the SNB might also buy currencies in the event of “excessive pressure on the appreciation of the franc”.
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