The central banks of Switzerland and Hungary unexpectedly raised interest rates in their countries on Thursday. With the interest rate hikes, the central bankers want to tackle the hard-rising inflation. The interest rate steps follow the sharp interest rate hike in the United States, where the Federal Reserve increased the interest rate by as much as 0.75 percentage points.

The Swiss National Bank raised interest rates by half a percentage point. The interest rate in the country thus comes to minus 0.25 percent. It was the first rate hike in Switzerland since 2007. The president of the Swiss central bank, Thomas Jordan, stated that he did not rule out future interest rate increases in order to stabilize inflation in the country.

The central bank also expects inflation to be higher than previously forecast, to 2.8 percent this year, 1.9 percent in 2023 and 1.6 percent in 2024. The Swiss franc rose in value after the interest rate decision. Also, the central bank indicated that it remained “active” in the foreign exchange market.

In Hungary, the country’s main interest rate rose by half a percentage point to 7.25 percent. It was the second rate hike in three weeks. The surprise interest rate hike followed a sharp decline in the value of the Hungarian currency, the forint, this week.

The forint hit a historic low against the euro on Monday. Investors dumped the coin after the Hungarian Central bank indicated its intention to slow the pace of interest rate hikes, despite inflation in the country having risen to its highest level in 21 years.

The British central bank is also holding an interest rate meeting on Thursday. The Bank of England is expected to raise interest rates for the fifth time in a row to combat high inflation. In May, interest rates in the United Kingdom were raised by a quarter of a percentage point to 1 percent. UK interest rates are at their highest level in 13 years. Inflation in the United Kingdom rose to 9 percent in april. This is the highest level in forty years.

The European Central Bank kept interest rates in the euro area unchanged last week. However, the central bank said it would begin a first rate hike of a quarter of a percentage point in July. That would be the first time since 2011.

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