Switzerland raises interest rates by half a point amid inflation fears

GENEVA – The Swiss central bank on Thursday announced a half-percentage-point increase in a key interest rate, the first increase in nearly 15 years. He said the move was an attempt to stave off inflationary pressures as food and fuel prices rise around the world.

The Swiss National Bank said the rate hike would take effect on Friday. The Swiss franc, which is generally considered a stable currency, surged against the euro and US dollar in currency markets after the announcement.

The bank said the rate on demand deposits would be raised by half a point, to minus 0.25%. Swiss interest rates have been negative for months, indicating that inflation was not a concern for monetary policymakers in the wealthy Alpine country.

The Swiss central bank last changed interest rates in January 2015, but the last increase was in September 2007, she said.

The bank said it “cannot rule out” that further rate hikes may be needed in the future. Annualized inflation stood at 2.9% for Switzerland in May, he said.

Global economic growth has slowed “markedly” in recent months, the bank said, in part due to inflation weighing on consumers’ wallets, fallout from the Russian war in Ukraine and coronavirus lockdowns in China. . Supply bottlenecks have pushed up prices for some products, he said.

The bank said it “assumes energy prices will remain high for the time being, but there will be no acute energy shortages in major economic areas.”

“The positive development of the economy should therefore continue overall,” the national bank said in a statement.

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This story corrects the Swiss rate hike amount to half a point, not a quarter point.

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