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Financial News: Swiss Central Bank Raises Key Rate Unexpectedly

Swiss Central Bank Raises Key Rate Unexpectedly

06/16/2022 - 03:51:00 (RTTNews)

(RTTNews) - The Swiss National Bank raised its key interest rate unexpectedly on Thursday, to combat inflationary pressures.

The bank raised the policy rate and the interest rate on sight deposits at the SNB by half a percentage point to ?0.25 percent from -0.75 percent. "It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilise inflation in the range consistent with price stability over the medium term," the bank said in the statement.

The bank said it is willing to be active in the foreign exchange market as necessary.

The central bank also adjusted the threshold factor used to calculate the level of banks' sight deposits at the SNB exempt from negative interest.

The SNB raised its inflation forecast citing global factors. The inflation projection for this year was raised to 2.8 percent from 2.1 percent. Similarly, the forecast for 2023 was lifted to 1.9 percent from 0.9 percent.

Inflation is seen at 1.6 percent in 2024 versus the previous outlook of 0.9 percent.

The war in Ukraine had comparatively little adverse impact on economic activity in Switzerland. For 2022, the SNB forecast GDP growth of around 2.5 percent.

Regarding property market, the bank said mortgage lending and residential property prices increased further in recent quarters. The SNB will continue to monitor developments on the mortgage and real estate markets closely.

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