In its latest quarterly monetary policy assessment, the Swiss National Bank (SNB) hiked its benchmark sight deposit interest rate to -0.25% from -0.75% previous.

The SNB surprised markets to the upside by raising the key rates by 50 bps, in an unprecedented move. 

Summary of the statement

The SNB is tightening its monetary policy and is raising the SNB policy rate and the interest rate on sight deposits at the SNB by half a percentage point to -0.25% to counter increased inflationary pressure.

The tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in Switzerland.

To ensure appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market as necessary.

It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilise inflation in the range consistent with price stability over the medium term.

Market reaction

USD/CHF slumped over one big figure in a delayed reaction to the 50 bps SNB rate hike. The pair is now trading at 0.9876, down 0.60% on the day. 

USD/CHF: 15-minutes chart

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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