The Swiss central bank hiked its interest rate by a quarter point on Thursday, saying inflationary pressure had increased again over the medium term.

"The Swiss National Bank is tightening its monetary policy further and is raising the SNB policy rate by 0.25 percentage points to 1.75 percent," the central bank said in a statement.

"In doing so, it is countering inflationary pressure, which has increased again over the medium term.

"It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term."

The SNB said inflation had declined significantly in recent months, and stood at 2.2 percent in May. It attributed the decrease to lower inflation on imported goods, notably lower prices for oil products and natural gas.

The SNB put its new forecast for average annual inflation at 2.2 percent for 2023 and 2024, and 2.1 percent for 2025.

"The lower oil and gas prices and the stronger Swiss franc are having a dampening effect over the short term," the SNB said.

From 2024 onwards, the new forecast is higher than the one issued in March, despite Thursday's policy rate increase, due to "ongoing second-round effects, higher electricity prices and rents, and more persistent inflationary pressure from abroad", the bank said.

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

The SNB said it was willing to be active in the foreign exchange market, with the focus in the current environment on selling foreign currency.

Analysis firm Capital Economics said the rate hike was in line with market expectations, but the upward revisions to the inflation forecast for the next two years "strongly suggest that there will be at least one more hike in this cycle", possibly in September.

"It is pretty clear that policymakers expect to raise rates further," it said.