Swiss Central Bank Enacts Biggest-Ever Key Interest Rate Hike

Switzerland’s central bank carried out the biggest hike ever to its key interest rate Thursday, following the U.S. Federal Reserve and other central banks around the world in aggressive moves to fight inflation.

The Swiss National Bank said it could not rule out further increases beyond the rise of three-quarters of a percentage point “to ensure price stability over the medium term.” It aims to cool off inflation that came in at 3.5% in August.

The rate increased from minus 0.25% to 0.5%, ending several years of negative interest rates in Switzerland — a testament to the stable growth, low-inflation environment, coupled with Switzerland’s appeal as a safe haven for assets.

In essence, that negative interest rate environment meant that people who parked assets in Switzerland paid for the privilege, a counterintuitive idea for many investors who might expect a return on their savings.