Swiss National Bank Raises Policy Rate by 50 bps to 1.00%, as expected

The Swiss National Bank raised interest rates by 50 bps to 1.00%, market pricing was looking for a 50-bps rate hike. Notably the Swiss franc fell on the decision as those hoping for a 75bps rate hike were disappointed. In the aftermath after “SNB will sell forex in future if appropriate, will also buy to check excessive appreciation pressure.” The rate hike is to counter increased inflationary pressure and “The SNB cannot rule out further rate hikes to stabilize inflation.”

Swiss National Bank

Monetary policy assessment of 15 December 2022
Swiss National Bank Tightens Monetary Policy


  • Raises rates 50 bps to 1.00%
  • Prior 0.50%
  • Rate hike is to counter increased inflationary pressure and further spread of inflation
  • It cannot be ruled out that additional rate hikes will be necessary
  • To provide appropriate monetary conditions, SNB also willing to be active in FX market as necessary
Switzerland Interest Rate

Inflation Projections

  • Sees 2022 inflation at 2.9% (previously 3%)
  • Sees 2023 inflation at 2.4% (previously 2.4%)
  • Sees 2024 inflation at 1.8% (previously 1.7%)
SNB Sep 22 Forecast

Market Reaction

  • Franc fell on the decision as those hoping for a 75 bps rate hike was disappointed evidently.
  • EUR/CHF pushed up from 0.9845 to 0.9890
  • USD/CHF moved up from 0.9255 to 0.9300

Remarks by SNB chief, Thomas Jordan

  • Underlying inflation pressure has increased
  • Danger remains inflation could stay elevated
  • It is too early to sound the all clear
  • SNB will sell forex in future if appropriate, will also buy to check excessive appreciation pressure

Monetary policy assessment of 15 December 2022

Press Statement

Swiss National Bank tightens monetary policy further and raises
SNB policy rate to 1.0%

The SNB is tightening its monetary policy further and is raising the SNB policy rate by
0.5 percentage points to 1.0%. In doing so, it is countering increased inflationary pressure and
a further spread of inflation. It cannot be ruled out that additional rises 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

The SNB policy rate change applies from tomorrow, 16 December 2022. Banks’ sight
deposits held at the SNB will be remunerated at the SNB policy rate of 1.0% up to a certain
threshold. Sight deposits above this threshold will be remunerated at an interest rate of 0.5%,
and thus still at a discount of 0.5 percentage points relative to the SNB policy rate. With this
tiered remuneration of sight deposits and open market operations, the SNB is ensuring that the
secured short-term Swiss franc money market rates are close to the SNB policy rate.

Inflation has declined somewhat in recent months and stood at 3.0% in November. However,
it is still clearly above the range the SNB equates with price stability. Inflation is likely to
remain elevated for the time being. The SNB’s new conditional inflation forecast is based on
the assumption that the SNB policy rate is 1.0% over the entire forecast horizon (cf. chart 1).

Up to the beginning of 2023, the forecast is below that of September owing to the somewhat
lower oil price. From mid-2023 onwards, the new forecast is higher and stands at 2.1% at the
end of the forecast horizon. That the new forecast is higher over the medium term despite the
raising of the SNB policy rate is attributable to stronger inflationary pressure from abroad and
the fact that price increases are spreading across the various categories of goods and services
in the consumer price index. The new forecast puts average annual inflation at 2.9% for 2022,
2.4% for 2023 and 1.8% for 2024 (cf. table 1). Without today’s SNB policy rate increase, the
inflation forecast would be even higher over the medium term.

Global growth momentum has continued to slow down. At the same time, inflation in many
countries is markedly above central banks’ targets. Accordingly, numerous central banks have
further tightened their monetary policy.

In its baseline scenario for the global economy, the SNB expects this challenging situation to
persist for now. Global economic growth is likely to be weak in the coming quarters, and
inflation will remain elevated for the time being. Over the medium term, however, inflation
abroad should return to more moderate levels, not least due to the increasingly tighter
monetary policy in many countries.

This scenario for the global economy is subject to significant risks. The energy situation in
Europe could worsen again. At the same time, high inflation could become embedded and
require renewed stronger monetary policy responses abroad. Finally, the coronavirus
pandemic remains an important source of risk for the global economy.

In Switzerland, GDP grew at an annualised rate of 1.0% in the third quarter. Economic
momentum thus remained similarly modest as in the preceding quarters. While many service
industries fared well, there was a renewed slight decline in value added in manufacturing.
The situation on the labour market remained positive. Employment continued to rise, and
unemployment decreased again slightly. Overall production capacity has been well utilised.

Switzerland’s GDP is likely to grow by around 2.0% this year. However, weaker demand
from abroad and the high energy prices are likely to curb economic activity markedly in the
coming year. Against this backdrop, the SNB expects GDP growth of around 0.5% for 2023.

The forecast for Switzerland, as for the global economy, is subject to high uncertainty. A
stronger economic downturn abroad or a pronounced energy shortage in Switzerland would,
in particular, have a negative effect.

Growth has remained largely unchanged in recent quarters for both mortgage lending and
prices for single-family houses and privately owned apartments. There are, however, signs of
a slowdown in prices for apartment buildings. The SNB will continue to monitor
developments on the mortgage and real estate markets closely.

More detailed information on the monetary policy decision can be found in Thomas Jordan’s
introductory remarks. Further information can be found in the introductory remarks of Martin
Schlegel and Andréa Maechler.

Source: SNB

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