Bern June 16 2022: The Swiss National Bank raised its policy interest rate for the first time in 15 years in a surprise move on Thursday and said it was ready to hike further, joining other central banks in tightening monetary policy to fight resurgent inflation.
The central bank increased its policy rate to -0.25% from the -0.75% level it has deployed since 2015, sending the safe-haven franc sharply higher. Nearly all the economists polled by Reuters had expected the SNB to keep rates steady.
It was the first increase by the SNB since September 2007, and followed a 0.75 percentage point hike in borrowing costs by the U.S. Federal Reserve on Wednesday.
Other central banks are also raising interest rates as they attempt to cool inflation driven higher by surging fuel and food prices that are straining budgets for households and businesses.
The Bank of England looks set to raise interest rates again on Thursday.
SNB Chairman Thomas Jordan said rising Swiss inflation – which hit its highest level in nearly 14 years in May – meant the central bank may have to act again.
Even after Thursday’s 0.5 point rate rise, the SNB expects inflation in the first quarter of 2025 to reach 2.1%, outside its target for a rate of 0%-2%. In 2022 it expects a rate of 2.8%.
