June 17, 2022: -On Thursday, the Swiss National Bank is its policy interest rate for the first time in 15 years, joining other central banks to tighten monetary policy to fight resurgent inflation and send the sharply higher safe-haven franc.
The central bank surged its policy rate to -0.25% from the -0.75% level in 2015. The hike was the first increase by the SNB since September 2007.
The move pursued a 0.75% rate hike by the U.S. Federal Reserve on Wednesday, while the European Central Bank signaled it would boost its rates to check overflowing inflation in the eurozone, which reached 8.1% the previous month.
“The tighter monetary policy is seeking to prevent inflation from spreading more broadly to goods and services in Switzerland.
It cannot be ruled out that the increases in the SNB policy rate will be necessary for the foreseeable future to stabilize inflation in the range consistent with price stability over the medium term,” it said in a statement.
“To ensure appropriate monetary circumstances, the SNB is willing to be active in the foreign exchange market as necessary.”
The safe-haven franc’s strength has dampened the impact of inflation in Switzerland by reducing cost promotions for fuel and food imports.
Still, the SNB raised its inflation forecasts for 2022 to 2.8% from the 2.1% it gave in March. It anticipates 1.9% and 1.6% inflation in 2023 and 2024, up from its prior view for prices increasing by 0.9% in both years.
The SNB hopes the Swiss economy to increase by about 2.5% in 2022.