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The Swiss National Bank (SNB) has hiked interest rates by 50 basis points and confirmed it would continue supporting a strong currency.

The Swiss Franc was supported against most peers in the wake of the SNB's decision to lift rates to 1.0% and as global equity markets fell, confirming the currency retains its 'safe haven' credentials.

The SNB said in a statement it cannot rule out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term.

The interest rates rise came after the SNB assessed inflation is still clearly above the range it equates with price stability.

Inflation stood at 3.0% in November.

"Inflation is likely to remain elevated for the time being," said the SNB.

However, new forecasts issued by the central bank show inflation is set to fall close to target over the coming months.

The new forecast puts average annual inflation at 2.9% for 2022, 2.4% for 2023 and 1.8% for 2024.

"Without today’s SNB policy rate increase, the inflation forecast would be even higher over the medium term," said the SNB.

Following the decision the Franc is broadly supported: the Pound to Franc exchange rate was at 1.1463, the Euro to Franc at 0.9870 and the Dollar to Franc at 0.9295.

The SNB also committed to remaining active in the foreign exchange markets to ensure the Franc remained supported.

This is because a stronger Franc lowers imported inflationary pressures and the currency's ongoing strength has done a significant part of the heavy lifting in ensuring Swiss inflation remains the lowest in the G10 currency space.

"This is all in keeping with this year’s policy of wanting to keep the real Swiss franc stable. To achieve that – and given that Swiss inflation is substantially lower than that overseas – the SNB requires nominal Swiss franc appreciation," says Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING Bank.

"Our call is that EUR/CHF continues to struggle to hold any gains over 0.99 and heads back to the 0.95 area into next spring," says Turner.