Switzerland is highly likely to raise key rate again

According to a statement made by President of The Swiss National Bank Thomas Jordan, there’s a high possibility of another rate hike in December.

As it was said by Jordan, a necessity to tighten monetary policy is highly likely to reappear, as it’s important to be sure that every possible measure is taken to curb the inflation.

Jordan also mentioned an increased level of inflation in Switzerland, as well as certain limited, but noticeable second-round effects in the country’s economy. According to his words, incoming data would affect the Swiss National Bank’s decision on whether to increase the rate at the December meeting or not.

The SNB has already increased borrowing costs by 125 basis points to the level of 0.5% over the course of the current year, and as it was shown by a recent Bloomberg’s survey, economists expect it to deliver another hike by 75 basis points next month.

In addition to the mentioned probability of the further hikes, Jordan also spoke about a readiness to sell foreign currency, backing his own statement made last week, in which he had given a promise to go to any lengths to support price stability in the medium term.

Jordan underlined once again that there are possibilities both to intervene if the Swiss franc is too strong and to sell foreign currency if the franc is too weak.

It should be recalled that the strong national currency worked as a shield for Switzerland from high levels of imported inflation. A slowdown in growth of consumer prices has been registered for two months, and the price growth is less than 3% in comparison with 10.7% registered in the eurozone.