Swiss central bank raises rates amid shocks

BERN, June 16 (Reuters) – Switzerland’s central bank unexpectedly raised its policy rate for the first time in 15 years on Thursday and said it was ready to raise rates further, joining other central banks in tightening monetary policy to fight inflation.

The central bank raised its policy rate to -0.25% from a level of -0.75% since 2015, sending the safe-haven Swiss franc sharply higher. Previously, almost all economists interviewed by Reuters expect the Swiss central bank to keep interest rates unchanged.

This is the first time the Swiss central bank has raised interest rates since September 2007, after the Federal Reserve raised borrowing cost by 0.75 percentage points on Wednesday.

Other central banks are also raising rates in order to ease inflation pushed up by soaring fuel and food prices that are straining household and business budgets.

Following the Federal Reserve’s sharp rate hike on Wednesday, the Swiss banks followed suit and announced a rate hike to fight inflation. The economic crisis is already on its way and the banks have been forewarned of what consequences the world is going to encounter this time. It is expected that other banks in Europe will also follow the pace.