BERN: The Swiss National Bank raised its policy interest rate by 50 basis points on Thursday - the central bank’s third hike this year as it stepped up its campaign to dampen inflation.

The SNB increased its policy rate and the rate it charges on sight deposits to 1.0% from the 0.5% level set in September.

The increase, which comes as other central banks also tighten policy, took Swiss interest rates to their highest level since the global financial crisis 14 years ago. The 50 basis point increase was in line with the majority of economist forecasts according to a Reuters poll.

“It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term,” the central bank said in a statement.

The SNB has already raised rates twice this year - in June and September - after holding them frozen at minus 0.75% for seven years as it fought the appreciation of the Swiss franc.

The central bank has switched focus to tackle resurgent inflation, which although low in international comparison at 3% remains outside its target range of 0-2% and high by Swiss standards.

Inflation “is still clearly above the range the SNB equates with price stability,” the central bank said in its statement. “Inflation is likely to remain elevated for the time being.”

Global central banks increase pace of rate hike in November

SNB officials have been vocal in recent weeks about the likelihood of rate increases, with Chairman Thomas Jordan saying last month he was ready to take “all measures necessary” to bring inflation down.

Other central banks have also been raising borrowing costs to tamp down on increasing prices caused by surging energy costs following Russia’s invasion of Ukraine and disrupted supply chains still recovering from the coronavirus pandemic.

The US Federal Reserve raised its interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of hikes by the end of 2023.

The European Central Bank is expected to increase its deposit rate by 0.5 of a percentage point later on Thursday, according to a Reuters poll, while the Bank of England is also forecast to add 50 basis points to its Bank Rate.

In its latest forecast on Thursday, the SNB said it expected an inflation rate of 2.9% in 2022, 2.4% in 2023 and 1.8% in 2024.