SNB hikes rates to by 75 bps to 0.50%, as widely expected
22.09.2022, 07:32

SNB hikes rates to by 75 bps to 0.50%, as widely expected

At its September quarterly monetary policy assessment, the Swiss National Bank (SNB) hiked its benchmark sight deposit interest rate by 75 bps to 0.50% from -0.25% previous, as widely aniticpated.

In the June meeting, the central bank surprised markets with a 50 bps increase, its first rate hike since September 2007. The dramatic move sent the Swiss franc surging more than 2% against the common currency.

Summary of the statement

In doing so, it is countering the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected.

It cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term.

To provide appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market as necessary.

Ready to take further FX measures.

Is adjusting the implementation of its monetary policy to the positive interest rate environment.

This ensures that the secured short-term Swiss franc money market rates remain close to the SNB policy rate.

Banks’ sight deposits held at the SNB are remunerated at the SNB policy rate up to a certain threshold.

Sight deposits above this threshold are remunerated at an interest rate of zero percent.

The SNB will also use liquidity-absorbing measures.

Market reaction 

In an initial reaction to the SNB rate hike decision, the USD/CHF pair spiked to fresh two-week highs of 0.9759, where it now wavers. The spot is adding 0.95% on the day.

About SNB Rate Decision

The Swiss National Bank conducts the country’s monetary policy as an independent central bank. It is obliged by the Constitution and by statute to act in accordance with the interests of the country as a whole. Its primary goal is to ensure price stability, while taking due account of economic developments. In so doing, it creates an appropriate environment for economic growth.

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