In his latest quarterly assessment of monetary policy, the Swiss National Bank (SNB) has raised its benchmark overnight deposit rate to -0.25% from -0.75% previously.
the SNB has surprised markets to the upside by raising interest rates by 50 basis pointsto an unprecedented extent.
Summary of the statement
The SNB is tightening its monetary policy and is raising the official SNB interest rate and the interest rate on demand deposits in the SNB by half a percentage point, up to -0.25%to counteract growing inflationary pressure.
The tightening of monetary policy aims to prevent inflation from spreading to goods and services in Switzerland.
To ensure adequate monetary conditions, the SNB is also willing to intervene in the foreign exchange market when necessary.
It cannot be ruled out that further increases in the official SNB interest rate will be necessary in the foreseeable future to stabilize inflation within a range compatible with price stability in the medium term.
market reaction
The USD/CHF plunged close to 100 pips in a delayed reaction to the SNB rate hike of 50 basis points. The pair is now trading at 0.9876, down 0.60% on the day.
USD/CHF 15 minute chart
Source: Fx Street
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