Following its quarterly meeting in June, assessing the monetary policy, the Swiss National Bank (SNB) announced 25 basis points (bps) increase to its benchmark sight deposit interest rate, lifting it from 1.50% to 1.75%, as widely expected.
The SNB delivered the fifth consecutive interest rate hike. Economists are now expecting the SNB to be on hold for at least the rest of the year following this month’s move.
Summary of the statement
In doing so, it is countering inflationary pressure, which has increased again over the medium term.
It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term.
To provide appropriate monetary conditions, the SNB also remains willing to be active in the foreign exchange market as necessary.
In the current environment, the focus is on selling foreign currency.
Market reaction
In a knee-jerk reaction to the SNB rate hike decision, the USD/CHF pair erased losses and swung back on the bids to test 0.8950, up 0.20% on the day.
About SNB Rate Decision
The Swiss National Bank conducts the country’s monetary policy as an independent central bank. It is obliged by the Constitution and by statute to act in accordance with the interests of the country as a whole. Its primary goal is to ensure price stability, while taking due account of economic developments. In so doing, it creates an appropriate environment for economic growth.
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