VOT Research Desk
As was largely predicted, the Swiss National Bank (SNB) increased its benchmark sight deposit interest rate by 50 basis points (bps), from 0.50% to 1.0%.
The SNB increased rates for the third time in a row during the December policy meeting, bringing the total number of rates hikes this year to 175 bps.
By doing this, it combats heightened inflationary pressure and further inflation spread.
The possibility of further increases in the snb policy rate cannot be ruled out in order to guarantee price stability over the medium term.
The snb is also prepared to participate in the foreign currency market if required in order to provide suitable monetary circumstances.
Compared to its September prediction, the SNB expects Swiss growth to be about 2% in 2022.
Swiss National Bank projects 2023 0.5% growth is the average. The SNB predicts 2.1% inflation in Q3 2025. will continue to participate in the foreign currency markets as required.
In order to guarantee price stability over the medium term, further increases in the SNB policy rate cannot be ruled out.
The SNB is also ready to participate in the foreign currency market if needed to provide the right monetary circumstances.
Up to a specific amount, sight deposits retained at the SNB will be compensated at the 1.0% SNB policy rate. Above this limit, sight deposits will receive interest payments at a rate of 0.5%, which represents a discount of 0.5 percentage points from the SNB policy rate.
Many central banks have tightened their monetary policies even further; in its base case for the global economy.
