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CURRENCY

Swiss benefitting from euro crisis: economists

The Swiss economy is benefitting more than first thought from the euro crisis, economists believe.

Switzerland’s stable currency and attraction as a safe country to park funds has meant that the crisis deepening in the rest of Europe has hardly touched the Helvetic Confederation, Jan-Egbert Sturm, an economic researcher from Zurich’s renowned technical university, told newspaper Tages Anzeiger.

“The Swiss franc is a safe haven, which means that lots of money is coming in from southern Europe. Conversely, the Swiss are keeping their money here and not putting it abroad,” he said.

As a result, Switzerland is doing much better than expected, which has prompted the economist to improve his predictions for the country’s economic growth this year.

Contrary to the views of Oswald Grübel, the former UBS chief, Sturm believes that keeping the euro exchange rate pegged at 1.20 francs ($1.24) is positive because it leads to low interest rates and indirect economic growth, as well as an increase in wages.

Economiesuisse economist Rudolf Minsch agrees that the lower limit of the currency rate should be kept as it is, but is less optimistic about Switzerland’s growth, believing that Switzerland’s position will weaken against the euro in the second half of the year.

Sturm said that the withdrawal of Greece from the eurozone would not be entirely disastrous, and could lead to stabilization of the European economy in the medium term. 

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ECONOMY

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.

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