SNB increases key interest rate by 0.5%

Continued high inflation

This is the fourth rate hike in a row. In June last year, the key interest rate was still -0.75%. Since then, interest rates have risen steadily and an increase was also assumed now. How eat like follows the trend set by the FED. Although inflation is lower than in the USA or in the euro zone, it is far from the 2% target and must be combated by the SNB as part of its mandate. The current inflation is mainly due to energy sources that are still expensive, especially high electricity prices and the goods prices that are influenced by them.

Growing fear of a financial crisis

The last few weeks have been very turbulent on the stock exchange and especially in the financial sector. After the insolvency of the Silicon Valley Bank and later also of the Signature Bank and Silvergate Capital, investors are unsettled. The resulting liquidity problems at Credit Suisse ultimately led to a takeover of CS by UBS last week. Even if a collapse could be prevented, there is uncertainty as to whether other banks could get into difficulties.

The swiss franc is becoming stronger against the euro again

After the euro-franc exchange rate rose from 0.975 to almost parity over the last week, a correction is becoming apparent with the interest rate hike by the Swiss National Bank. Shortly after the SNB's communiqué, the euro exchange rate fell from 0.999 to 0.994.