(Bloomberg) -- The Swiss National Bank raised its interest rate by 50 basis points and signaled more to come as it resumed its inflation fight just days after the downfall of the country’s second-biggest bank became the epicenter of global financial turmoil.

Officials lifted the benchmark to 1.5%, an outcome predicted by most economists before Credit Suisse Group AG’s forced takeover by larger rival UBS Group AG clouded the outlook with worsened market turbulence earlier this week.  

“It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term,” Thomas Jordan said in a statement. “To provide appropriate monetary conditions, the SNB also remains willing to be active in the foreign exchange market,” he said, adding that currency sales have been the focus.

The quarterly announcement on Thursday by Swiss policymakers matches that of the European Central Bank, which raised by the same amount last week, and follows Wednesday’s move by the Federal Reserve to hike by a quarter point.

By pushing through with a large step, the SNB signaled its alarm about inflation outweighs any concerns after the market reaction to the Swiss deal on Sunday, whose terms triggered a tightening of financial conditions for banks throughout Europe. Officials did acknowledge that turmoil had been a distraction.

“A Credit Suisse bankruptcy would have had serious consequences for national and international financial stability and for the Swiss economy,” Jordan said. “Taking this risk would have been irresponsible.”

Read more: SNB’s Jordan Says Swiss Measure Put Halt to Credit Suisse Crisis

“The SNB sounds clearly more hawkish than expected,” said Karsten Junius, chief economist at Bank J Safra Sarasin Ltd. “We expect another rate hike by 25 basis points in June.”

While consumer-price growth in Switzerland is less than half of the surrounding euro area and is low by international standards, an unexpected acceleration in February and worries of potential wage pressures prompted heightened concern by officials.

The move allows Switzerland to partially narrow the difference with the higher rates of the ECB and the Fed, whose policymakers set monetary policy twice as often. Benchmark borrowing costs in Switzerland remain 150 basis points lower than in the euro area.

The move on Thursday could potentially help shore up the franc against imported price pressures. The Swiss franc flipped to gains against the euro in the wake of the decision, rising as much as 0.2% to 0.9936 per euro. 

The SNB projects inflation of 2.6% in 2023, slowing to 2% in the following two years. That compares with prior forecasts for 2.4% this year and 1.8% in 2024. 

Jordan attributed the higher projection to “stronger second-round effects and the fact that inflationary pressure from abroad has increased again.” He observed that “price increases are now also broad-based.”

After unexpectedly failing to grow in the final quarter of last year, Switzerland is still seen likely to escape a recession. The SNB sees the economy likely to expand around 1% this year, down from 2.1% in 2022.

Jordan’s press conference is likely to face the most questions on the Credit Suisse deal that he helped oversee last weekend. It included a controversial wipe-out of so-called AT1-bonds, provoking global market ructions before regulators elsewhere reassured investors that they wouldn’t do the same.

--With assistance from Kristian Siedenburg, Joel Rinneby, Claudia Maedler, Fergal O'Brien, Marion Halftermeyer, Philip Lagerkranser and Libby Cherry.

(Updates with economist comment in seventh paragraph.)

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