The Swiss National Bank paused its monetary tightening, defying expectations of another interest-rate hike to avoid adding constriction on a stalled economy.

Policymakers led by President Thomas Jordan left the key rate at 1.75%, an outcome anticipated by only a small minority of economists surveyed by Bloomberg.

"Over the last quarters, tighter monetary policy has countered inflation pressures," the SNB said in a statement. "Further monetary tightening can't be excluded."

The move, which contrasts with last week's increase in the neighboring euro area, suggests officials are reassured that inflation already below the SNB's 2% ceiling isn't in danger of too much re-acceleration. It suggests more concern about growth, not least after recent gains in the franc. 

The decision by the SNB, which unveils announcements only once a quarter, widens the gap in rates with its peers. 

Borrowing costs there have increased by 250 basis points since starting out last year, compared with 450 basis points in the euro area and even more in the US.

The move puts Switzerland in position to keep pausing and let tighter monetary policy feed through the economy in tandem with counterparts around the world, in line with the "higher for longer" stance espoused by Federal Reserve Chair Jerome Powell. 

That outlook was reiterated on Wednesday by US policymakers as they kept rates unchanged and signaled that they're close to done with hiking. Powell said several times that the central bank can now "proceed carefully." 

Source : Bloomberg