SNB hikes key deposit rate by 50 bps to 1.50%, as widely expected

In its quarterly monetary policy assessment, the Swiss National Bank (SNB) raised its benchmark sight deposit interest rate by 50 basis points (bps) from 1.0% to 1.50% in March, as widely expected.

The SNB raises rates for the fourth straight meeting, with markets now expecting the final hike to come in June.

Summary of the statement

The SNB is tightening its monetary policy further.

In doing so, it is countering the renewed increase in inflationary pressure.

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.

For some quarters now, the focus has been on selling foreign currency.

SNB sees 2023 swiss growth at around 1 % vs dec forecast for growth around 0.5%.

SNB sees 2023 inflation at 2.6 % (previous forecast was for 2.4%).

SNB sees 2024 inflation at 2.0 % (previous forecast was for 1.8%).

SNB sees 2025 inflation at 2.0%.

SNB sees Q4 2025 inflation at 2.1%.

Market reaction 

In a knee-jerk reaction to the SNB rate hike decision, the USD/CHF pair dropped nearly 40 pips to test 0.9120, down 0.52% 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.