# Swiss National Bank says inflation battle not yet won Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-12-15 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Swiss National Bank hints at further interest rate hikes Meta Description: SNB Chairman Thomas Jordan warns of high inflation as the central bank raises interest rates to combat rising prices, with further increases possible. URL: https://financedigest.com/swiss-national-bank-says-inflation-battle-not-yet-wonhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-12-15t094158z1lynxmpeibe0gsrtroptp4swiss-snb-rates-1736814718889-compressed.jpg) By John Revill and Michael Shields BERN (Reuters) – Swiss National Bank Chairman Thomas Jordan said it was too early to “sound the all-clear” on high inflation after the central bank hiked interest rates again on Thursday and hinted further increases were still possible. The SNB raised its policy interest rate by 50 basis points to 1% – the central bank’s third hike this year as it stepped up its campaign to dampen the rise in prices. Although inflation plateaued at 3% in November, it remains elevated by Swiss standards and outside the SNB’s [price stability goal of annual increases](https://www.financedigest.com/coca-cola-hbcs-annual-profit-beats-warns-of-price-increases.html "Coca-Cola HBC’s annual profit beats, warns of price increases") of 0-2%. [“Inflation has declined somewhat since August,”](https://www.financedigest.com/spain-august-final-12-month-inflation-at-10-5.html "Spain August final 12-month inflation at 10.5%") Jordan told reporters. “While this development is welcome, it is still too early to sound the all-clear. “It cannot be ruled out that further increases will be necessary.” The rate increase, which comes as other [central banks also tighten](https://www.financedigest.com/inflation-trumps-financial-risks-as-central-bank-tightening-set-to-continue.html "Inflation trumps financial risks as central bank tightening set to continue") policy, took Swiss interest rates to their highest level since the global financial crisis 14 years ago. Jordan declined to commit to a final [rate the bank](https://www.financedigest.com/ecbs-villeroy-rate-hike-signals-strong-confidence-in-european-banks.html "ECB’s Villeroy: rate hike signals strong confidence in European banks") could reach before it halted increases. “We are not specific about any possible terminal rate. We go from quarter to quarter … looking at the new [inflation forecasts,”](https://www.financedigest.com/boes-saunders-worries-inflation-will-be-higher-than-forecasts.html "BoE’s Saunders worries inflation will be higher than forecasts") he said. If you look at our newest forecast that we published today, you will [see that the longer end of the inflation](https://www.financedigest.com/britains-next-sees-lower-clothing-inflation-shares-dip-on-cautious-outlook.html "Britain’s Next sees lower clothing inflation, shares dip on cautious outlook") forecast is slightly going upwards, and it is at 2.1%, so this is indicating that the current stance of monetary policy does not guarantee by itself that price stability is ensured. Jordan also said the SNB would continue to sell foreign currency in future “if this is appropriate” although there was no [set target](https://www.financedigest.com/eu-sets-recycling-reuse-targets-to-cut-packaging-waste.html "EU sets recycling, reuse targets to cut packaging waste") for how much to sell. The SNB has been selling forex in recent months – a move that has supported the [Swiss franc](https://www.financedigest.com/swiss-franc-grapples-with-safe-haven-identity-crisis-after-credit-suisse.html "Swiss franc grapples with safe-haven identity crisis after Credit Suisse"), whose strength has helped reduce the impact of inflation from more expensive imports. [Interest rates](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") nevertheless remain the “key” tool of the SNB’s monetary policy, Jordan said, with currency market interventions taking a secondary role. Karsten Junius, an economist at J.Safra Sarasin, said he expected another 50 basis point [hike in March before SNB rates](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") eventually reach 2% in the middle of next year. The wording of the statement might be a tad more hawkish than the [market might have expected as there is absolutely no indication](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures") that the SNB could pause or slow down its rate hikes,” Junius said. The SNB had already [raised rates](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll") in June and September after keeping them frozen at minus 0.75% for seven years as it fought the appreciation of the Swiss franc. SNB [officials had been vocal in recent weeks about the likelihood of rate](https://www.financedigest.com/bank-of-england-officials-split-over-future-path-for-rates.html "Bank of England officials split over future path for rates") increases. Other central [banks have also been increasing borrowing costs to stifle inflation caused](https://www.financedigest.com/explainer-what-are-credit-default-swaps-and-why-are-they-causing-trouble-for-europes-banks.html "Explainer-What are credit default swaps and why are they causing trouble for Europe’s banks?") by surging energy prices following Russia’s invasion of Ukraine and disrupted supply chains still recovering from the coronavirus pandemic. The U.S. Federal Reserve [raised its interest rates](https://www.financedigest.com/bank-of-england-raises-rates-to-3-5-says-inflation-has-peaked.html "Bank of England raises rates to 3.5%, says inflation has peaked") by half a percentage point on Wednesday. The European Central [Bank and Bank of England](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure") were also forecast to tighten policy. In its latest forecast, the SNB said it [expected inflation](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected") of 2.9% in 2022, 2.4% in 2023 and 1.8% in 2024. [Inflation was then expected to rise](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") again, to 2.1% in the third quarter of 2025. The fact that inflation forecasts are above 2% for the end of the forecast horizon is a clear signal, in my view, that the SNB will do more in terms of [rate hikes,”](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk") said Charlotte de Montpellier, an economist at ING. I [expect a final 50 bp hike](https://www.financedigest.com/ecbs-makhlouf-expects-50-bps-rate-hike-in-december.html "ECB’s Makhlouf expects 50 bps rate hike in December") at the March 2023 meeting, before stabilizing for a long time. (Reporting by John Revill, Editing by Paul Carrel, Kirsti Knolle and Catherine Evans) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---