Status: 16/06/2022 15:30
The Swiss central bank surprisingly raised interest rates today. The Bank of England is also tightening monetary policy further. The guardians of the currency were forced to act by the high inflation.
European central banks are increasingly trying to contain high inflation through higher interest rates. In the morning, the Swiss Central Bank surprised the markets with the first interest rate hike since 2007. The Swiss National Bank (SNB) raised interest rates by half a percentage point. However, it remains in negative territory and is now minus 0.25%.
“Absolutely central objective of price stability”
The central bank said that further rate hikes cannot be ruled out in order to stabilize inflation over the medium term. In Switzerland, however, inflation is relatively low due to the strong Swiss franc. In May it was 2.9 percent. According to the SNB, consumer prices are expected to rise by 2.8 percent in 2022. Without the rate hike, the forecast would be “significantly higher”, according to the SNB.
“It would be remiss to ignore inflationary developments,” said SNB President Thomas Jordan. At the same time, he envisaged further hikes in interest rates, if necessary, in order to keep inflation in check. “The goal of price stability is absolutely central to us.”
New course: Thomas Jordan, Chairman of the Board of Directors of the Swiss National Bank.
Bild: picture alliance / KEYSTONE
Swiss central bankers are thus setting new priorities. Because for years they have been fighting against the constant upward pressure of the national currency, the Swiss franc. This increases considerably after the surprising decision on the foreign exchange market.
Already the fifth rate hike in Great Britain
The Bank of England announced another interest rate hike in the afternoon. In the fight against inflation, it raised the key rate by a quarter of a point to 1.25%. This is the fifth rate hike in seven months. The decision was made by six to three votes, with three currency observers hoping in vain for an even larger move to 1.50 percent.
The previous evening, the US Federal Reserve had raised the benchmark interest rate by an unusually high amount of 0.75 percentage points in order to curb inflation. This was the largest interest rate hike in the United States since 1994. The ECB also announced a 25 basis point rate hike in July.
The Bank of England said it was ready to act “forcefully” to contain the threat posed by high inflation. In December, it was the first major central bank to raise interest rates since the krone pandemic. This was quickly followed by further interest rate hikes. The central bank wants to use this to fight high inflation, which according to its new forecast could now be just over 11% in October. In April, UK inflation hit a 40-year high of 9%.
The SNB raises the interest rate to -0.25 percent
Kathrin Hondl, ARD Geneva, June 16, 2022 4:04 pm