Switzerland set for another interest rate hike, central bank chief warns

The Local Switzerland
The Local Switzerland - [email protected] • 23 Jan, 2023 Updated Mon 23 Jan 2023 11:39 CEST
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Swiss National Bank President Thomas Jordan. Photo by Fabrice COFFRINI / AFP

After having raised its key interest rates three times in the past year the head of the Swiss National Bank has warned another hike is likely.

Speaking at the World Economic Forum in Davos on Friday, the central bank (SNB) head Thomas Jordan said  that more increases could be imminent.
 
The measure would be taken to tame inflation, which stood at 2.8 percent on average for most of 2022 and which the SNB wants to lower to 2.4 percent in 2023.
 
"The population doesn't like inflation, so ... the focus on price stability is absolutely essential," he pointed out.
 
Though Jordan didn’t specify by how much the rates will go up this time, analysts believe interest will be raised by another 0.5 percent, bringing it to 1.5 percent. 

The increase is not a surprise, since the SNB already said in September, when it raised the key interest rate by 0.75 percentage points, that further hikes in the policy rate "will be necessary to ensure price stability over the medium term."

Is another rate hike good or bad for Swiss consumers?
 
It depends on what people intend want to  do with their money.

Any big-ticket items that require credit — like property — will become more expensive.

If you already have a fixed-rate mortgage, then you are safe from rate increases for the term of your mortgage.

But if you are a new buyer or have variable-rate mortgages, prepare to dig deeper into your pockets as interest rates could reach up to 4 percent this year.

On the other hand, if you have a bank account, you can expect to see a higher yield on assets, though the actual increase depends on several factors, such as what bank you use and what kind of accounts you have there. 
 
READ MORE: EXPLAINED: What the steep rise in Swiss interest rates could mean for you

 

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