The Swiss National Bank (SNB) has decided to maintain its current interest rates at its latest quarterly monetary policy meeting.

After raising rates for five consecutive quarters starting in June 2022, the SNB has chosen to keep its main policy rate steady at 1.75%.

In a statement, the SNB stated that the recent tightening of monetary policy has successfully countered remaining inflationary pressures.

However, the SNB added that it may need to further tighten monetary policy in the future to ensure price stability over the medium term.

In August, Switzerland experienced an annual inflation rate of 1.6%, comfortably below the SNB’s target of 2%. This is significantly lower than the eurozone’s inflation rate of 5.3% during the same period.

The Swiss franc, which has been the top-performing G10 currency this year, has strengthened while the Swiss economy has stagnated in the second quarter. This suggests that this may be the final interest rate hike from the SNB for now.

At its previous meeting in June, the SNB opted for a 25 basis point increase, following previous increments of up to 75 basis points.

The SNB acknowledged that the global economic growth outlook in the coming quarters remains subdued, although inflation is expected to stay elevated worldwide for the time being.

However, the SNB also highlighted the possibility of a significant global economic slowdown due to persistently high inflation in other parts of the world. This could lead to further monetary policy tightening by central banks. The SNB also considered the potential deterioration of the energy situation in Europe over the winter.

The main risk to the Swiss economy, according to the SNB, is this potential slowdown. The central bank expects the Swiss economy to grow by approximately 1% this year, with slight increases in unemployment and a decline in production capacity utilization.