- The Swiss National Bank (SNB) is again tightening interest rates. It increases the key interest rate by 50 basis points to 1.5 percent.
- The tensions in the financial system, which led to the takeover of CS by UBS, did not affect this decision.
- This is the fourth rate hike in a row.
The Swiss key interest rate was previously +1.00 percent. Last June it was still clearly in the red at -0.75 points, but it has been positive again since September.
Actually, until recently it was as clear as day that further interest rate hikes were imminent: Although inflation in Switzerland is lower than in Europe or the USA, it is still too high and the National Bank has to fight it with further interest rate hikes accordingly. Inflation has risen sharply again in the last two months and, at 3.4 percent, was well above the SNB’s target range of 0 to 2 percent. Electricity prices and higher prices for flights and package tours were mainly responsible for the recent increase.
Concerns about the financial crisis
But recently inflation isn’t the only thing that’s causing fear and terror. The collapse of the three medium-sized US financial houses Silicon Valley Bank, Signature Bank and Silvergate Capital last week triggered shock waves in the international banking and financial system, and Credit Suisse, which had been in crisis for a long time, also got caught up in the whirlpool – which, as is well known, resulted in the takeover by UBS flowed.
And this new banking crisis, which already reminds some market participants of the financial crisis of 2008/09, is now throwing many central banks into a dilemma. In order to further combat inflation, they would actually have to raise interest rates. On the contrary, an interest rate cut would be appropriate to stabilize the system.