On 23 March 2023, the Swiss National Bank (SNB) lifted its policy rate by 50 basis points (half a percent) to 1.50%.
The SNB said that it was tightening its monetary policy further to counter the renewed increase in
inflationary pressure. In addition it said that it could not rule out additional rises as part of its focus on ensuring price stability over the medium term.
Inflation has risen again since the beginning of the year, and stood at 3.4% in February, above the range the SNB equates with price stability. The latest rise in inflation is principally due to higher prices for electricity, tourism services and food. However, price increases are now broad-based, said the SNB in a statement.
Stronger second-round effects and the fact that inflationary pressure from abroad has increased again mean that despite the raising of the SNB policy rate, the new inflation forecast is now higher through to mid-2025 than it was in December 2022, said the central bank. The new forecast puts average annual inflation at 2.6% for 2023, and 2.0% for 2024 and 2025.
To provide appropriate monetary conditions, the SNB also remains willing to be active in the foreign exchange market, it said.
The central bank also mentioned the events surrounding Credit Suisse over the past week. The measures announced at the weekend by the federal government, FINMA and the SNB have put a halt to
the crisis, it said. The SNB is providing large amounts of liquidity assistance in Swiss francs and
foreign currencies. These loans are secured and subject to interest.
At the same time the forecast for Switzerland, as for the global economy, is subject to high uncertainty. In the short term, the main risks are an economic downturn abroad and adverse effects of the turmoil
in the global financial sector.
And while residential mortgage growth has remained largely stable in recent months, there are signs of a slowdown in residential real estate prices, and vulnerabilities on the mortgage and real estate
markets persist, said the SNB.
The SNB has now hiked rates from a low of -0.75% in June 2022 to 1.50% today, a total rise of 2.25% in less than 12 months – see SNB chart.