Swiss government delays action over strong franc

The Swiss government met in Bern for an extraordinary session on Monday as ministers try to restrain the Swiss franc. 

Finance minister Johann Scheider-Ammann said he shared the view of the National Bank (SNB) that the franc was considerably overvalued and that an intervention in the financial markets may be necessary. 

“Further measures are being assessed. They have to be taken at the right moment and not just in the short-term,” Schneider-Ammann told the Tages Anzeiger.

He referred to measures already taken like compensation for reduced working hours and the stated goal to finalise further Fair Trade Agreements with countries like China, India and Russia.

As yet, no concrete decision has been made and details on any potential measures are not expected until Tuesday or later. The government will meet on August 17th and in the coming weeks to address the situation.

Switzerland is currently performing well internationally and compared to its neighbouring countries. But today the NZZ newspaper reported that the Swiss stock exchange fell clearly into negative territory with major indices making heavy losses.

What Schneider-Ammann said in his five-minute meeting with the media on Monday evening did little to calm Swiss politicians as they are waiting for days on a decisive act from the Bundesrat or at least a clear signal.

Business expert Pirmin Bischof of the Christian Democratic People’s Party (CVP) showed his disappointment in Scheider-Ammann: “I miss the strong communicative opinion of the Bundesrat,” he told the Tages Anzeiger newspaper.

Social Democratic Party (SP) minister, Susanne Leutenegger-Oberholzer, spoke to the Tages Anzeiger of a “communication politics, which is leading Switzerland into a black autumn and winter. Neither the National Bank nor the Bundesrat seem to be taking the crisis seriously.”

Leader of the Green Party, Ueli Leuenberger, had a similar view: “The Bundesrat should not leave people alone with their fears about the workplace and their savings.”

Representatives of the SVP have no problem with the restraint of the government: “Room for manoeuvre in Switzerland is tight,” said member of the Swiss National Council and Trade Commission president Hansruedi Wandfluh: “If he came out with statements without substantial content, then he would make a laughing stock out of himself.”

His colleague and bank expert Hans Kaufmann sees it similarly: “The financial markets are not stupid and are not dazzled by well-meaning statements.”  


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Swiss central bank announces big rate hike in inflation fight

The Swiss National Bank (SNB) raises the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

Swiss central bank announces big rate hike in inflation fight

“The rate change applies from tomorrow, September 23rd 2022”, SNB said in a press release on Thursday.

It added that “inflation [in Switzerland] rose to 3.5 percent in August and is likely to remain at an elevated level for the time being”.

The latest rise in inflation is principally due to higher prices for goods, especially energy and food, according to the bank.

The SNB’s forecast for the evolution of inflation is, however, positive.

It forecasts that the rate will drop to 2.4 percent in 2023 and and 1.7 percent for 2024.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher”, the bank said.

In mid-June, the SNB tightened interest rates by half a percentage point for the first time in 15  years. Since then, inflation in Switzerland has continued to rise. For August 2022, the statisticians reported inflation of 3.5 percent, after 3.4 percent in June and July.