The pace of interest rate increase of the Swiss Central Bank and its ability to withstand the strong surge of the Swiss franc.


■ The increase of consumer price index in February continues to be higher than the central bank's target, and the Swiss Central Bank may maintain a 0.5% interest rate increase
■ As concerns about the US financial system spread, the Swiss franc will continue to rise, and the ability of the Swiss National Bank (Central Bank) will be tested.

  The Swiss National Bank (SNB, Central Bank) announced on December 15, 2022 that it would raise the policy interest rate from 0.5% to 1.0%. The interest rate was raised for three consecutive meetings, but the range of interest rate increase was reduced from 75bps at the last meeting (as of September of the same year) to 50bps. The monetary policy report said that further interest rate increase is a necessary condition to ensure medium-term price stability and cannot be ruled out. While the inflation rate in 2023 is expected to remain at 2.4%, it will be raised from September 2024 to 1.8% in end of 2024. The central bank's target (0.0-2.0%) will not meet the expectation until October to December 2023. It is suggested to maintain monetary tightening temporarily.
  The consumer price index (CPI) for February, released on the 6th, rose 3.4% year-over-year. Excluding food and fuel and other volatile core CPI, the growth rate accelerated to 2.4%, and the central bank's target continued to rise. With the bankruptcy of a regional bank in the United States, more and more people speculate that major central banks such as the United States are considering reducing the rate increase or even suspending the rate increase. On the 8th, the governor of the Swiss Central Bank said that he would not rule out further interest rate hikes to curb inflation. At the 23rd meeting of the Swiss Central Bank, it is likely to raise the policy interest rate, but it is doubtful whether the interest rate hike can be maintained at 50bps.
  The Japanese yen and Swiss franc, regarded as safe assets, rose due to the spread of anxiety about the US financial system. On the 10th, the Swiss franc rose to a low of 147 yen against the yen, and rose to a low of 0.97 yen against the euro yesterday, hitting new highs in about three months and about five months respectively. The President of the Swiss Central Bank has pointed out that he is prepared to intervene in the foreign exchange market to achieve its price target, which will test the ability of the Swiss Central Bank to withstand the recent surge in the Swiss franc.