In line with expectations, the SNB today opted to tighten policy again but at a slower pace. The policy rate was raised by 25 basis points, halving the pace of the 50-basis point rate hikes seen in March and December and putting the benchmark rate at 1.75 percent. The bank again noted that additional rate hikes may be necessary to ensure price stability in the medium term.

As in previous assessments, the latest MPA also indicates that the central bank will intervene in the FX markets as necessary to ensure price stability, and noted that in the current environment, the focus is on selling foreign currency.

The bank said deposits held at the SNB will be remunerated at the new policy rate up to a certain threshold above which they will be remunerated at 1.25 percent. This tiered structure maintains the 0.5 percentage point discount with the policy rate and is aimed at ensuring that secured short-term local money market rates are held close to the policy rate.

Citing a significant decline in inflation in recent months to 2.2 percent in May, the bank's new conditional inflation forecast is below that of March for 2023 but, due to second-round effects, higher from 2024 onward. The new projections are for average annual inflation of 2.2 percent this year (versus 2.6 percent in March), 2.2 percent in 2024 (2.0 percent) and 2.1 percent in 2025 (2.0 percent). Meantime, Swiss GDP growth this year is put at 1.0 percent, unchanged from last time but subject to a high degree of uncertainty.

After three successive 50-basis-point hikes, the SNB is seen slowing to 25 basis points given a loss of economic momentum, lingering worries about the country's banking system, and, crucially, slowing in inflation.

The Swiss National Bank (SNB) usually announces any changes to its monetary stance at its quarterly Monetary Policy Assessment. However, adjustments can be made at any time. Since 2000 monetary policy has consisted of the following three elements: a definition of price stability, a medium-term inflation forecast and a target range for a reference interest rate, the three-month Swiss franc Libor (London Interbank Offered Rate). The SNB attempts to secure an annual inflation rate as specified by the consumer price index (CPI) of less than 2 percent. In recent times this has involved sizeable intervention in the foreign exchange market to prevent appreciation of the Swiss franc although since January 2015 there has been no explicit exchange rate target.

The aim of the SNB's monetary policy is to ensure price stability in the medium and long term. By keeping prices stable (2 percent annual inflation rate), the SNB seeks to create an environment in which the economy can fully exploit its production potential. The Bank is required to set its policy to meet the needs of the Swiss economy as a whole rather than the interests of individual regions or industries.

The SNB has traditionally implemented its monetary policy by fixing a target range of 1.0 percentage points at the level deemed appropriate for the three-month Swiss franc Libor. The Bank has then normally sought to hold the rate around the middle of that corridor. However, as a result of strong capital inflows into the local currency prompted by the 2008/09 global downturn, this objective range has been both narrowed and reduced to just 0.0 - 0.25 percent, with a point target of 0.0 percent. In fact, since September 2011 the thrust of policy has been determined largely by the SNB's expressed aim of preventing the CHF strengthening beneath a CHF1.20 floor versus the euro.

The Swiss National Bank publishes its monetary policy assessments on a quarterly basis in March, June, September and December. In these reports it describes the current monetary environment and formulates its monetary policy intentions for the following quarter. It also provides inflation forecasts which help financial markets to formulate of where monetary policy might be headed. Twice a year -- in June and in December -- the Bank holds a media conference. At that time, the Governing Board provides information about the economic situation and comments on its monetary policy.