Switzerland tightens monetary policy in line with European rate rise

Switzerland's National Bank is to tighten monetary policy, following a decision by the European Central Bank to raise interest rates.

Switzerland’s National Bank is to tighten monetary policy, following a decision by the European Central Bank to raise interest rates.

The Swiss National Bank announced it would aim to keep rates at the upper end of its three-month LIBOR (London Interbank Offered Rate) range.

The range itself, however, remains unchanged at 1.75 to 2.75 per cent.

The news follows a decision by the European Central Bank to raise its key interest rate by a quarter point to 3.5 per cent.

It’s the second increase by the ECB this year, and was widely expected as the Frankfurt-based bank tries to keep the lid on rising inflation caused by Europe’s economic recovery.

Growth in the 11 countries that use the Euro is projected to increase by three per cent this year.

The interest rate rise should also support the single currency, which remains weak against the US dollar.

Analysts say the ECB was also keen to show its independence and act before the US Federal Reserve, which is expected to raise its rates the next time it meets.

swissinfo and agencies