At its September quarterly monetary policy assessment, the Swiss National Bank (SNB) hiked its benchmark sight deposit interest rate by 75 bps to 0.50% from -0.25% previous, as widely aniticpated.
In the June meeting, the central bank surprised markets with a 50 bps increase, its first rate hike since September 2007. The dramatic move sent the Swiss franc surging more than 2% against the common currency.
Summary of the statement
In doing so, it is countering the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected.
It cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term.
To provide appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market as necessary.
Ready to take further FX measures.
Is adjusting the implementation of its monetary policy to the positive interest rate environment.
This ensures that the secured short-term Swiss franc money market rates remain close to the SNB policy rate.
Banks’ sight deposits held at the SNB are remunerated at the SNB policy rate up to a certain threshold.
Sight deposits above this threshold are remunerated at an interest rate of zero percent.
The SNB will also use liquidity-absorbing measures.
In an initial reaction to the SNB rate hike decision, the USD/CHF pair spiked to fresh two-week highs of 0.9759, where it now wavers. The spot is adding 0.95% 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.