(AOF) – Sharply higher at the start of the day, the Swiss franc is now down 1.5% to 1.0351 euro. The Swiss National Bank (SNB) however announced this morning the continuation of the tightening of its monetary policy by raising, as expected, its key rate by 75 basis points to bring it to 0.5%. The Swiss currency could be penalized by the prospect of intervention by the SNB to limit the appreciation of its currency. The central bank said it was “willing to be active, if necessary, in the foreign exchange market, in order to guarantee “appropriate monetary conditions”.
Since the start of the year, the Swiss franc has gained more than 9% against the euro, including 1.5% in five sessions.
Historically, Switzerland has struggled to maintain a low exchange rate, with a high franc affecting the country’s competitiveness in its export markets.
However, a strong currency is a logical response to keeping the cost of imports as low as possible and containing consumer prices.
By raising its rates this morning, the institution intends to counter “the inflationary pressure which has increased again and to hinder its spread to goods and services less affected so far by the increase in prices”.
The SNB does not rule out that further rate hikes are necessary to ensure price stability in the medium term.
Inflation reached 3.5% in August and should initially remain at a high level. According to the new SNB forecast, inflation will average 3% in 2022, 2.4% in 2023 and 1.7% in 2024 on an annual average.
Without the rate hike announced today, the inflation forecast would be significantly higher, the central bank said.
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