Bigger Than Forecast Swiss Central Bank Interest Rate Hike
September 22, 2022
In raising Switzerland’s policy interest rate by a record 75 basis points to 0.50%, Swiss National Bank officials ended a period of negative interest rates stretching back to January 2015. Policy at the SNB is reviewed quarterly, and an initial 50-basis point hike was engineered at the prior meeting. More restraint seems likely: SNB President Jordan warns that “it cannot be ruled out that further increases in the SNB policy rate will be necessary,” and new inflation forecasts were revised sharply higher for 2022 and 2023 even though such embody the impact of today’s rate hike, which had not been foreseen earlier. On-year CPI inflation of 3.5% in August may crest further over coming months, and projected average inflation in 2023 was raised a half percentage point to 2.3%. As before, the central bank reserves the right to intervene when needed to counter franc appreciation. The currency is considered overvalued at its current level.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Swiss National Bank
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