This is the first interest rate hike in Switzerland since September 2007, which came as a surprise to most. According to the polls of the DailyFX portal, experts did not expect the rate to change.
As of 08:41 GMT, the Swiss franc was 1.5% stronger against the euro and 1% against the dollar. Once the decision of the Central Bank was announced, the exchange rate soared to 2% against the euro and 1.6% against the dollar.
The Central Bank claims the interest was raised to address an "increased inflationary pressure" in the country even though it is relatively low compared to other European countries, standing at 2.9%.
"We came to the conclusion that it's the right time now to tighten monetary policy in order to make sure that over the medium term inflation then returns to the zone of price stability," Swiss National Bank chair Thomas Jordan told CNBC broadcaster.
Jordan also did not rule out new hikes in the future "to stabilize inflation over the medium term below 2%."
According to the Central Bank, inflation in Switzerland peaked at 2.9% in May and is unlikely to slow down. The forecast for this year was adjusted from 2.1% to 2.8%, from 0.9% to 1.9% expected in 2023 and from 0.9% to 1.6% in 2024.