Switzerland's central bank hiked its policy interest rate by 25 basis points on Thursday in a bid to curb inflation, indicating additional tightening is likely in the future.

Swiss National Bank (SNB) Chairman Thomas Jordan signalled mounting inflationary pressures and the danger of price hikes becoming embedded as the bank increased rates for the fifth consecutive time. 

Even though Switzerland's inflation declined to 2.2% in May from 2.6% in April, the SNB governor said there was still work to be done to combat rising prices, Reuters reports. 

"The marked decline in recent months is very welcome," Jordan said. "Nevertheless, the underlying inflationary pressure has risen further.

"That means most likely that tighter monetary policy is necessary to bring inflation sustainably below 2%. But we can also afford the more gradual approach," he added.

Although inflation has been edging down around the world from multi-decade highs, central banks globally haven't yet ended their monetary tightening campaigns to bring price hikes under control. 

Inflation in Switzerland has stayed above the central bank's target range of 0% to 2% since February last year. 

The Swiss National Bank has hiked its policy rate and the rate charged on sight deposits to 1.75% from the 1.5% level established in March, the Reuters report goes on to say, meaning Swiss interest rates were at their highest since October 2008. 

Yet the Swiss Franc lost 0.2% against the Dollar following the decision, which defied certain market expectations of a 50-basis point rise. 

Jordan added that although the country had lower inflation than other nations, it was dangerous to accept the current price hikes.

"Inflation would most likely not stabilise but would rather go up again, and we would have to fight inflation further down the road with more rate increases," he commented.

Analysts forecast another rate hike at the central bank's September meeting.