The Swiss National Bank (SNB) is raising interest rates again due to renewed inflationary pressure and despite the recent turbulence in the banking sector. The SNB key interest rate will be raised by 0.5 percentage points to 1.5 percent, as the central bank announced on Thursday. According to the central bank, it cannot be ruled out that additional interest rate hikes will be necessary to ensure price stability in the medium term. If necessary, the SNB also intends to continue to intervene in the foreign exchange market.
The majority of economists surveyed by the Reuters news agency in the run-up to the SNB’s quarterly monetary policy assessment had forecast a rate hike of 0.5 percentage points.
It was the fourth rate hike in a row. Last summer, the SNB tightened interest rates by half a percentage point for the first time in fifteen years. At the time, it was still clearly negative at minus 0.75 percent.
Regarding Credit Suisse Group AG, the central bank said the measures announced over the weekend had “stopped the crisis”. The monetary authorities emphasized that the loans granted for liquidity support were secured and would bear interest. The Swiss government and financial regulators pushed the major bank UBS over the weekend to take over its ailing rival Credit Suisse.
In view of stronger second-round effects and the even stronger inflationary pressure from abroad, the SNB now sees inflation at an annual average of 2.6 percent in 2023 and at 2.0 percent in 2024 and 2025. Price growth rose to 3.4 percent in February.
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