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| Switzerland and Norway Hike Interest Rates Amid Banking Turmoil |
The Swiss National Bank and Norway’s central bank have hiked their interest rates by 50 basis points and 25 basis points, respectively, in an attempt to tackle rising inflation. The move comes after the US Federal Reserve increased borrowing costs by a quarter of a percentage point on Wednesday. Analysts predict that the Bank of England may follow suit and hike rates in the face of stubbornly high inflation and turmoil in the global banking sector.
Switzerland’s latest rate increase follows the bank’s involvement in the recent UBS buyout of Credit Suisse. The move also comes just days after the bank joined other major central banks in boosting liquidity in the wake of the latest banking crisis. The collapse of Silicon Valley Bank and Signature Bank in the US earlier this month sent shockwaves across global markets.
The Fed’s accompanying statement suggests that it may soon pause its monetary tightening. Recent developments in the banking sector are “likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation,” the Fed said. However, hot inflation remains a major problem and is widely seen as threatening a global recession this year.
The Bank of England is now “highly likely” to raise its key rate by 25 basis points, following official data showing a surprise jump in annual UK inflation to 10.4 percent. If it does so, it will be the central bank’s eleventh rate increase in a row since the end of 2021.
