SNB raises policy rate by 75bps to 0.50% as widely expected, to counter “renewed rise in inflation pressure”. It “cannot be ruled out” that further rate hikes will be “necessary”. The reference to the timeframe of “in the foreseeable future” was dropped. The statement suggests that it’s probably a pause for SNB now.
SNB expects that inflation is “likely to remain at an elevated level for the time being”. Based on the assumption that policy stays at 0.50% over the entire forecast horizon, inflation will peak at 3.4% in Q3, and stay slowing from Q2 2023 to 1.6% in Q2 2024. Inflation will average 3.0% in 2022, 2.4% in 2023, and then 1.7% in 2024.
Regarding the economy, SNB expects GDP growth of around 2% this year, roughly 0.5% lower than the last monetary policy assessment. Uncertainty remains high and the biggest risks are a “a global economic downturn, a worsening of the gas shortage in Europe and a power shortage in Switzerland”.
