The Swiss National Bank (BNS) has prioritized the fight against inflation over the turbulence in the banking system and has increased interest rates by another 50 points this Thursday, to 1.50%. Inflation is at 3.4%, still close to the highest since the 1990s. It is the fourth consecutive increase in the price of money in the Swiss country.
Switzerland’s central bank has acknowledged that the past week was marked by events surrounding Credit Suisse. However, the institution has stated that the measures announced over the weekend by the federal government, FINMA and the BNS “have put a stop to the crisis.”
The president of the SNB, Thomas Jordan, has assured that the next two weeks will be vital to secure the acquisition of Credit Suisse by UBS. It is “extremely important” that both parties do everything possible to make the acquisition a success. “At this time, attention must be focused on maintaining financial stability and on closing the transaction quickly and smoothly,” he has urged.
In a statement, the central bank has justified the increase in interest rates by the renewed increase in inflationary pressure and has warned that “additional increases cannot be ruled out” to guarantee price stability in the medium term. Furthermore, in order to provide the appropriate monetary conditions, the SNB has also expressed its willingness to be active in the foreign exchange market as needed.
In its analysis, the institution warns that the new forecast places average annual inflation at 2.6% for 2023 and 2% for 2024 and 2025, while projections suggest that the Swiss economy will grow around 1 % this year. “The forecast for Switzerland, as for the global economy, is subject to high uncertainty. In the short term, the main risks are an economic downturn abroad and the adverse effects of turmoil in the global financial sector,” he said. indicated.
