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Swiss central bank announces big rate hike in inflation fight

The Swiss National Bank (SNB) raises the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

Published: 22 September 2022 10:14 CEST

Swiss National Bank's headquarters in the Swiss capital Bern.

Swiss National Bank's headquarters in the Swiss capital Bern. (Photo by Fabrice COFFRINI / AFP)

“The rate change applies from tomorrow, September 23rd 2022”, SNB said in a press release on Thursday.

It added that “inflation [in Switzerland] rose to 3.5 percent in August and is likely to remain at an elevated level for the time being”.

The latest rise in inflation is principally due to higher prices for goods, especially energy and food, according to the bank.

Monetary policy assessment of 22 September 2022 https://t.co/XUjTfk3Mpm

— Swiss National Bank (@SNB_BNS) September 22, 2022

The SNB’s forecast for the evolution of inflation is, however, positive.

It forecasts that the rate will drop to 2.4 percent in 2023 and and 1.7 percent for 2024.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher”, the bank said.

In mid-June, the SNB tightened interest rates by half a percentage point for the first time in 15 years. Since then, inflation in Switzerland has continued to rise. For August 2022, the statisticians reported inflation of 3.5 percent, after 3.4 percent in June and July.

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Why there is a push in Switzerland to make buildings higher

Many of Switzerland’s cities are suffering from a chronic housing shortage, with the demand for accommodation far exceeding the available supply.

Though a number of measures have been proposed — for instance, loosening certain regulations which slow down construction of new buildings, such as noise ordinances — the Swiss Tenants Association has said current plans lack “rapid and effective measures.”

READ ALSO: Why Swiss tenants are unhappy with plan to solve housing shortage

Reaching new heights

Another possible solution currently on the table addresses the scarcity of land for new constructions.

“This is why expansion must absolutely take place at height,” the Liberal-Radical Party (PLR) said in a press release.

This means that additional living space should be created on top of current residential buildings.

To that end, “building and zoning regulations in Swiss cities must be adapted so as to systematically integrate the raising of one or two floors into urban plans.”

“In addition, in all residential areas, the maximum authorised height of existing buildings should be increased by at least three metres. This should make it possible to add an additional floor or two for housing, where possible,” the party states.

The ‘where possible’ clause would exclude historic buildings that cannot be altered and ones where adding more floors is not feasible for technical reasons.

Building ‘upwards’ not only creates space for more dwellings, but also helps stop urban sprawl and preserves agricultural land, according to PLR’s MP Simone de Montmollin.

What might happen next?

The party has started an online petition, which it urges all Swiss citizens who favour this change to sign.

“Building and zoning standards in Swiss cities must be adapted so that the maximum permitted height for existing buildings in all residential areas is increased by three metres,” its text says. “This should make it possible to add an additional floor for housing, independently of the existing use.”

If and when the petition collects at least 100,000 signatures, the issue would be brought to a ballot box.

No details are available about the number of signatures collected to date.

Historic perspective

While the idea may sound ground-breaking, it is not.

As de Montmollin pointed out, already in the 16th century, houses were raised in Geneva to create accommodation for persecuted Protestants (Huguenots) fleeing France.

Much more recently, such ‘elevations’ have been possible in Geneva thanks to a law passed in 2008.

And in Zurich, the PLR, along with a multi-party coalition, launched a popular initiative for the raising of existing buildings.

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