2023-07-28 14:24:22
While the US Federal Reserve (Fed) and the European Central Bank (ECB) have just announced an increase in their key rates, what will the Swiss National Bank (SNB) do?
By reducing the liquidity available on the markets, central banks seek to counter inflation. Thus, on Wednesday, the US Federal Reserve raised its key rates for the eleventh time in just over a year. Thursday was the turn of the European Central Bank (ECB). A rise in interest rates has multiple consequences, particularly on mortgages, rents and even on businesses. Moreover, for 20 years, in Europe, the demand for corporate credit has been at its lowest.
In general, the SNB follows the rhythm given by the ECB and by the United States. Switzerland should therefore not escape a sixth rate hike.
>> Read also: In the United States, the Fed raises its rates, the highest since 2001
However, the decision will not be made before next September. Until then, inflation might still evolve, even if, for the moment, it seems under control. In June, for the first time since January 2022, it fell below the 2% mark, thus reaching the target set by the SNB.
>> Read also: Inflation slows in June, but food prices continue to climb
The Swiss franc and its stability at stake
According to Charles Wyplosz, observatory member of the SNB, it is difficult to know how Switzerland will react: “It will also depend on what will happen to the exchange rate. If the franc goes down, they will want to go up. If it doesn’t move without intervention, maybe they’ll want to pause and see what happens.”
>> Listen to the full interview with Charles Wyplosz, observatory member of the SNB: US Federal Reserve has increased its key rates, itw Charles Wyplosz observatory member of the BNS / La Matinale / 56 sec. / today at 06:27
It is nevertheless likely that we will see the last rate increases. This means that in the short term at least, mortgage rates, loans, especially for cars or even Swiss rents, are likely to continue to rise.
The risks of slowing growth
Inflation remains a very difficult phenomenon to predict. Just as it is complicated to tame it. The effects of a monetary policy decision are only noticeable a year later.
Central banks should still calm things down, at the risk of slowing growth and creating unemployment.
While waiting for this lull, our savings should be better remunerated, provided of course that the banks pass on the rise in rates.
>> Read also: The ECB raises its key rates for the ninth time in a row
Radio subject: Cléa Favre
Adaptation web: Miroslav Mares
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