The Swiss National Bank (SNB) does not move a millimeter. Seven years after the start of the unnatural negative interest rate, it is still -0.75 percent.
Like a boulder. And completely across the landscape.
Interest rates have turned around, officially this week in the US. The FED, the US central bank, wants to raise interest rates by almost 2 percent in a total of 7 steps of probably a quarter percent each.
The reason is inflation. The prices shoot through the roof. Current figure from overseas: annual inflation of 8 percent. And that was before the recent oil and gas upheaval.
In the EU, the increase in the shopping basket is well over 5 percent. The ECB, i.e. the European Central Bank, is signaling for the first time that it is turning away from its endless flood of cheap money.
But the SNB bosses are not moving. Your fear is the franc. This could become even stronger if interest rates are turned in a positive direction.
SNB to lift negative interest rate.
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The undeterred adherence to the 0.75 percent negative interest rate is wrong. Commercial banks are currently earning twice as much in the interest business. They grant mortgages at 1.5 percent and more, but pay customers zero interest.
Or let them bleed from 100,000 francs at Postfinance or 250,000 francs at UBS and most others with a penalty interest rate.
This means that the banks benefit from an unprecedented interest rate margin. For doing nothing; just sit there and distribute all the money – that’s how they make the money of their lives.
The Swiss citizens and homebuyers play well. You pay the interest – twice. First on an increasingly expensive mortgage, then on her savings.
The profits of the money houses explode. The cantonal, regional and Raiffeisen banks achieved record profits in 2021. Now the journey continues – a rain of money without end for bankers in deckchairs.
The cheated are the customers, the citizens, Mr. and Mrs. Swiss. They finance profits for the banks that eclipse everything that has gone before.
The SNB shouldn’t be indifferent. Negative interest is and remains an anachronism. Being rewarded with interest for going into debt is absurd.
An end to the negative interest rate regime is urgent. Raising the key interest rate from minus 75 basis points to 0 would be correct and urgent.
No one understands why the SNB bosses are not doing this. The franc is strong either way – which has many advantages. A “gold” franc makes imports cheap and thus reduces inflationary pressure.
In addition, the Swiss can buy and invest cheaply abroad with their hard currency, for example in real estate. A carry trade that pays off.
Negative interest gone – everything else is more questionable every day.
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