How Switzerland's interest rate hike might affect you
The Swiss National Bank (SNB) announced on Thursday that it was raising the key interest rate by 0.25 percentage points to 1.75 percent.
What effect could this have on consumers?
In the statement, the SNB said the move is to counter "inflationary pressure, which has increased again over the medium term".
The rate change applies from tomorrow, June 23rd, 2023.
Monetary policy assessment: The press release and introductory remarks delivered by the Governing Board members at the news conference are available on our website (in English, German, French and Italian): https://t.co/F9E6e5eAMl pic.twitter.com/jjjGUrPLNx
— Swiss National Bank (@SNB_BNS) June 22, 2023
It came as inflation in Switzerland has declined significantly in recent months, dropping to 2.2 percent in May.
"This decrease was above all attributable to lower inflation on imported goods, in particular lower prices for oil products and natural gas," said the SNB.
However, this rate is still above the target set by the central bank.
The bank's statement outlined that "higher electricity prices and rents, and more persistent inflationary pressure from abroad," were having an effect on the inflation forecast.
What does this hike in interest rates mean for you?
It depends on what, if anything at all, you are looking to buy.
If you are planning to get big-ticket items that are usually purchased with credit — like homes — then you may have to dig deeper into your pockets.
If you already have a fixed-rate mortgage, then you are safe from rate increases for its term.
If not, rates could go up, though it is not clear by how much.
But it is not all bad news; higher interest rates will yield some benefits as well.
For instance, if you have certain types of investments — such as bonds and other fixed-income financial products — you may see more money coming in.
And if you have a bank account, you can expect to see a higher yield on your assets, though the actual increase depends on several factors, such as what bank you use and what kind of accounts you have there.
READ ALSO: Swiss central bank announces interest rate hike to combat inflation
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In the statement, the SNB said the move is to counter "inflationary pressure, which has increased again over the medium term".
The rate change applies from tomorrow, June 23rd, 2023.
Monetary policy assessment: The press release and introductory remarks delivered by the Governing Board members at the news conference are available on our website (in English, German, French and Italian): https://t.co/F9E6e5eAMl pic.twitter.com/jjjGUrPLNx
— Swiss National Bank (@SNB_BNS) June 22, 2023
It came as inflation in Switzerland has declined significantly in recent months, dropping to 2.2 percent in May.
"This decrease was above all attributable to lower inflation on imported goods, in particular lower prices for oil products and natural gas," said the SNB.
However, this rate is still above the target set by the central bank.
The bank's statement outlined that "higher electricity prices and rents, and more persistent inflationary pressure from abroad," were having an effect on the inflation forecast.
What does this hike in interest rates mean for you?
It depends on what, if anything at all, you are looking to buy.
If you are planning to get big-ticket items that are usually purchased with credit — like homes — then you may have to dig deeper into your pockets.
If you already have a fixed-rate mortgage, then you are safe from rate increases for its term.
If not, rates could go up, though it is not clear by how much.
But it is not all bad news; higher interest rates will yield some benefits as well.
For instance, if you have certain types of investments — such as bonds and other fixed-income financial products — you may see more money coming in.
And if you have a bank account, you can expect to see a higher yield on your assets, though the actual increase depends on several factors, such as what bank you use and what kind of accounts you have there.
READ ALSO: Swiss central bank announces interest rate hike to combat inflation
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