FABRICE COFFRINI | AFP | Getty Images The Swiss National Bank on Thursday raised its benchmark interest rate to 0.5%, a move that brings an end to an era of negative interest rates in Europe. The 75 basis point increase follows a rise to -0.25% on June 16, which was the first rate hike in 15 years. Before that, the Swiss central bank had kept interest rates steady at -0.75% since 2015. It comes after inflation in Switzerland hit 3.5% last month – the highest rate in three decades. The bank said the rate hike addressed a resurgence in inflationary pressures and the spread of inflation to goods and services that have so far been less affected. He added that further rate hikes “cannot be ruled out”. The increase was in line with economists’ expectations, according to a Reuters poll. The Swiss franc fell sharply against the dollar and euro after the interest rate hike. At 9:15 am London time, the dollar was 1.24% higher against the Swiss currency and the euro was 1.6% higher. Earlier this week, the Swiss franc hit its strongest level against the euro since January 2015 as economists began to speculate on the prospect of a 75 basis point hike. Switzerland was the last remaining country in Europe with a negative policy rate as the region’s central banks aggressively raised interest rates to tackle rising inflation. Japan is now the last major economy with a central bank in negative territory after the Bank of Japan decided to keep interest rates on hold at -0.1% on Thursday. Denmark, meanwhile, ended its nearly decade-long streak of negative interest rates on September 8 when the central bank raised its benchmark interest rate by 0.75 percentage points to 0.65%. Most recently, Sweden’s central bank raised its interest rate to 1.75% on September 20. The 100 basis point increase came as the Riksbank warned, “inflation is too high”. The European Central Bank moved above zero when it raised interest rates to combat soaring inflation on September 8. The ECB could continue to raise interest rates, but future hikes will not be as drastic as the most recent 75 basis point increase on September 9, according to ECB Governing Council member Edward Scicluna.
