🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

Swiss National Bank hikes key rate by 50bps to 1.5%, says more may be needed

Published 23/03/2023, 08:06 pm
© Reuters.
USD/CHF
-
CSGN
-
UBSG
-
SNBN
-

By Geoffrey Smith 

Investing.com -- The Swiss National Bank (SIX:SNBN) raised its key rate by 50 basis points and warned that further hikes may be necessary, shrugging off risks to the financial sector and to economic growth from the collapse of Credit Suisse (SIX:CSGN) last week.

"It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term," the bank said, adding that further sales of its foreign currency reserves to support the franc are also possible.

The bank's announcement comes less than a week after the SNB, regulator FINMA, and the federal government forced through a hasty sale of Credit Suisse to rival UBS (SIX:UBSG), aiming to stop a disorderly collapse that would have devastated the international reputation of Switzerland as a haven of financial stability.

The SNB devoted only one brief paragraph in its statement to that episode, saying tersely that "The measures announced at the weekend by the federal government, FINMA and the SNB have put a halt to the crisis. The SNB is providing large amounts of liquidity assistance in Swiss francs and foreign currencies. These loans are backed by collateral and subject to interest."

Swiss inflation stood at 3.4% in February, "principally due to higher prices for electricity, tourism services and food," the SNB said. "However," it added, "price increases are now broad-based."

The SNB expects inflation to return to just over 2% by the end of 2025, while it expects growth of a modest 1% this year.

The franc rose against the dollar after the SNB's statement, on expectations that the bank will find it easier than the Federal Reserve to raise rates any further, given the greater concerns about financial stability in the U.S.

By 04:50 ET (08:50 GMT), the dollar fetched CHF 0.9130, down 0.5% on the day.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.