Switzerland may need a further rate hike

The Swiss National Bank (SNB) may raise interest rates again with the purpose of fighting inflation, which remains at a quite high level.

As Andrea Maechler, one of the SNB governing board members, announced, although inflation in Switzerland in October has decreased from 3.3% to 3%, it’s still unacceptably high, as the bank pursues the target rate from 0% to 2%.

According to forecasts, SNB expects to reach inflation at the level of 2%, i.e., the upper border of its target, by the third quarter of the next year. The bank’s representatives consider a steady anchoring of inflation below 2% to be a victory.

The Swiss bank has already raised interest rates twice this year. Currently, the rate is 0.5%. Last December, Maechler underlined that the rate hike, as well as monetary policy tightening wouldn’t be ruled out, especially if it might provide price stability.

At the same time, it’s worth noting that the inflation rate in Switzerland is significantly lower than in other countries. For example, it’s 7.7% in the U.S. and 10.7% in the eurozone. However, as Maechler stated, SNB is primarily guided by the country’s interests and conducts monetary policy in accordance with its priorities, regardless of other central banks’ actions.