By Ed Frankl

Switzerland's central bank on Thursday increased interest rates for a fourth consecutive time, seeking to curb stubbornly high inflation relative to historic levels, as the country deals with the turmoil in its key banking sector after the takeover of Credit Suisse Group AG.

The Swiss National Bank increased its policy rate by 50 basis points, to 1.5%, equaling its half-point increase at its prior December meeting.

It comes after Swiss inflation came in at 3.4% in February, accelerating from 3.3% in January, and above the SNB's target of between 0% and 2%.

The SNB said the rate rise was countering the renewed increase in inflationary pressure, and couldn't rule out additional rises in policy rates to ensure price stability over the medium term.

Still, Swiss inflation is well below that of the eurozone, where inflation was 8.5%.

The decision comes after the takeover of Credit Suisse by its crosstown rival UBS Group AG, with the central bank providing large amounts of liquidity assistance in an effort to halt uncertainty in financial markets.

The SNB said measures announced by the government, market regulator Finma and the bank had put a halt to the crisis.

Meanwhile, the central bank said inflation is likely to remain elevated, with forecasts now higher than previous ones made in December.

In its new inflation forecasts, the SNB puts average annual inflation at 2.6% for 2023, and 2.0% for 2024 and 2025. Overall, the country's gross domestic product is likely to increase by a modest 1% this year, it added.

Write to Ed Frankl at edward.frankl@wsj.com

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(END) Dow Jones Newswires

March 23, 2023 05:02 ET (09:02 GMT)