The Swiss National Bank (SNB) surprised the market by raising interest rates for the first time since 2007 in response to inflation soaring to a 14 -year high in May.
Policymakers led by President Thomas Jordan opted to join other major global central banks by raising interest rates by 50 basis points to -0.25%.
The central bank also signaled that more tightening may be needed in the future to stabilize inflation.
The Swiss franc strengthened following the announcement, with the SNB also adding that it would remain ‘active’ in the currency market.
The decision has come as a shock to the market which expects no changes to be made by the central bank.
Meanwhile, the SNB also released its forecast on inflation which is expected to increase at 2.8% this year, 1.9% in 2023 and 1.6% in 2024.
The following forecasts are much higher than those made in March when they projected 2.1% this year and 0.9% in 2023 and 2024.
