SNB hikes, but outlook blurred by market turmoil

The Swiss National Bank (SNB)’s decision to hike rates adds to the evidence that the recent market turmoil does not preclude further policy tightening from central banks, especially when rates are relatively low to begin with. While the outlook for Swiss rates is now far less clear than a month ago,we still think there is a good chance that upside risks to inflation, stemming particularly from rising capacity utilisation, will cause the Bank to hike rates once more this year.