Swiss National Bank hikes rates by 50 basis points

The Bank said it was looking to tackle "the renewed increase in inflationary pressure" and that further rate hikes could not be ruled out to ensure price stability in the medium term.

It said in a statement: "The past week has been marked by the events surrounding Credit Suisse. The measures announced at the weekend by the federal government, FINMA and the SNB have put a halt to the crisis. The SNB is providing large amounts of liquidity assistance in Swiss francs and foreign currencies. These loans are backed by collateral and subject to interest.

"Inflation has risen again since the beginning of the year, and stood at 3.4% in February. It is therefore still clearly above the range the SNB equates with price stability. The latest rise in inflation is principally due to higher prices for electricity, tourism services and food. However, price increases are now broad-based."

The SNB said it now forecasts average annual inflation at 2.6% for 2023 and 2% for 2024 and 2025.

Adrian Prettejohn, Europe economist at Capital Economics, said the move by the SNB "shows that, like the ECB and Fed, Swiss policymakers have not been distracted from their inflation-fighting task by problems in the banking sector".

"With underlying price pressures strengthening this year, and the SNB forecasting that inflation will still be at the top end of its target range in 2025, we expect at least another 25bp rate hike in June, with a strong chance of further rises," he added.

On Wednesday, the US Federal Reserve lifted rates by 25 basis points despite recent turmoil in the banking sector.