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Swiss Central Bank Lifts Policy Rate To Positive Territory

The Swiss National Bank raised its key interest rate to positive territory on Thursday to counter the renewed rise in inflationary pressure.

The central bank hiked the SNB policy rate by 0.75 percentage points to 0.5 percent, as expected. This was the second consecutive rate hike.

The interest rate turned positive for the first time since early 2015.

"It cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term," the bank said in the statement.

To provide appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market as necessary, the SNB added.

The inflation projection for this year was raised to 3.0 percent from 2.8 percent. The outlook for 2023 was lifted to 2.4 percent from 1.9 percent and that for 2024 to 1.7 percent from 1.6 percent.

The SNB's new conditional inflation forecast is based on the assumption that the SNB policy rate is 0.5 percent over the entire forecast horizon.

On the economic front, the central bank said the further development is likely to be shaped by the economic slowdown abroad and the availability of energy in Switzerland.

For this year, the central bank forecast GDP growth of around 2 percent, this was roughly half a percentage point lower than at the last monetary policy assessment.

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