Switzerland emerged from the era of negative interest rates on Thursday, as its central bank joined others around the world in tightening monetary policy more aggressively to fight resurgent inflation.
The Swiss National Bank (SNB) raised its benchmark interest rate by 0.75 percentage point, ending the country’s seven-and-a-half-year experience with negative rates that sparked opposition from its financial sector and fears of asset bubbles.
The increase to 0.5% from minus 0.25% followed a 50 basis point increase in June from minus 0.75%, the SNB’s first rate increase in 15 years.
Swiss government bond yields tumbled after Thursday’s move, reversing course after an initial spike, while the franc fell broadly, falling against the dollar, euro and pound as markets priced in a 100-point rise. -base by the SNB.
The central bank did not rule out further rate hikes to come.
“It cannot be ruled out that further increases in the SNB base rate will be necessary to ensure price stability in the medium term,” SNB President Thomas Jordan told a news conference.
Jordan declined to elaborate on the timing or size of any future increases.
Source: CNN Brasil
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