SNB Holds Fire on Rate Hike as Inflation Rises

The Swiss National Bank (SNB) maintained its policy rate at 0% last Thursday, a decision that surprised no one. What's on everyone's mind now is what happens next for Switzerland's central bank.

Switzerland has diverged from other advanced economies in recent months, with the European Central Bank (ECB) and Federal Reserve raising interest rates to combat inflation. However, the SNB has kept its rate steady at 0%.

Markets expect some tightening in Switzerland as well, but it's unclear when this will happen. One reason for hesitation is that Swiss headline inflation has risen to 0.8%, largely due to higher energy prices. The data shows that almost all the increase reflects these price increases.