EXPLAINED: What the steep rise in Swiss interest rates could mean for you

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

EXPLAINED: What the steep rise in Swiss interest rates could mean for you
Depending on what you are buying, your purchasing power ma go up or down. Photo by Emil Kalibradov on Pexels

As announced by Switzerland’s central bank on Thursday, the rate change applies from Friday, September 23rd.

“The bank’s aim is to counter the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected”, according to SNB.

The SNB has not said how long the current rate will be in place, but noted that “it cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term”.

READ MORE: Swiss central bank announces big rate hike in inflation fight

Inflation rate in Switzerland currently stands at 3.5 percent. While it is much lower than in the eurozone, where it exceeds 9.1 percent, it is still higher than its usual rate of below 1 percent.

Why has the SNB raised the interest rate for the first time since 2015?

For the same reason that other central banks have done so, including the European Central Bank and the Federal Reserve in the US: price stability

In general, central banks see increasing interest rates as a response to rising inflation: higher rates help reduce the overall level of demand and, subsequently, also the upward pressure on prices.

Whether this strategy will work is another matter.

The SNB rate hikes will “have a fundamentally dampening effect on inflation”, Felix Oeschger, analyst at Moneyland price comparison platform, told The Local.

“However, it is far from clear whether these alone will be enough to curb inflation”, he added.

One for the reasons for this uncertainty, Oeschger said, is that “the energy crisis and the high prices of some agricultural commodities, such as wheat, are a result of the Ukraine war. These prices are more difficult to influence with key interest rate increases”.

In its inflation forecast, the SNB predicted the inflation will drop to 2.4 percent in 2023.

But “considering that the SNB has continuously revised its inflation forecasts upward since December 2021, it is quite conceivable that inflation in Switzerland will continue to rise or at least remain high”, Oeschger pointed out.

READ MORE: EXPLAINED: The groups most affected by inflation in Switzerland

Will the Swiss consumers benefit (or not) from the higher interest rates?

It depends on what you are looking to buy.

If you are planning to buy big-ticket items that are usually purchased with credit — like homes — then you may have to dig deeper into your pockets.

If you already have a fixed-rate mortgage, then you are safe from rate increases for the term of your mortgage.

But for new buyers or those with variable-rate mortagages, things may be more problematic.

“It is not excluded that mortgage interest rates will reach 3 to 4 percent next year”, from the current 2.6 to 3.1 percent, according to Donato Scognamiglio, director of real estate platform Iazi.

What about rents?

Tenants may not be better off than homeowners.

Many have already received notices of higher rents to compensate for increased costs of energy.

Now another charge could be added as well, though probably not immediately.

“Rents will go up, but only when the reference interest rate itself is raised”, Scognamiglio said.

The benchmark interest rate is the average of all mortgage interest rates. If the reference rate increases by 0.25%, tenants will have to pay 3 percent more rent. “I expect this to happen next year”, he said.

But it is not all bad news; higher interest rates will yield some benefits as well.

For instance, if you have certain types of investments, you may see more money coming in.

“I expect yields on fixed-income financial products such as bonds to continue to rise”,  Oeschger said.

“In the case of medium-term notes issued by Swiss banks, we have already seen significant increases since the beginning of the year”, he added.

As for savings accounts, however, “the banks have so far been very hesitant to raise interest rates, but if monetary policy tightens further, we can expect interest rates to rise slightly here as well”.

Generally speaking, what will become cheaper and more expensive for consumers?

The bad news here is that everything that has to do with energy, even indirectly, will become more expensive.

This includes “heating, transport costs, electricity and also food”, another Moneyland expert, Ralf Beyeler told The Local.

READ MORE: Pasta up by 13 percent: How food and energy prices in Switzerland are rising

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members


What will be cheaper and more expensive in Switzerland in 2024?

Prices for many products have been rising in Switzerland for nearly two years. Is there any relief in sight for 2024?

What will be cheaper and more expensive in Switzerland in 2024?

After the war in Ukraine triggered global inflation in February 2022, prices of many common consumer goods in Switzerland have soared — some by as much as 20 percent. 

What will happen, in terms of prices, in 2024?

The good news is that inflation has fallen in Switzerland — from 3 percent in 2022 to below 1.7 percent currently, which has also brought prices of some consumer goods downward.

While the inflation rate is expected to rise slightly at the beginning of next year — to 1.9 percent — prices of some consumer goods and services will drop, even if slightly.

But first let’s look at costs that will actually increase next year.

Health insurance premiums

They will go up by 8.7 percent. This is a national average, which means some people will pay more and others less — though the increase will hit everyone. 

Ticino residents, for instance, will experience the highest increase — 10.5 percent.

Premiums in a number of other cantons will also exceed the 8.7-percent national average — for instance, Zug (10.2), Nidwalden and Thurgau (9.5), Vaud (9,9); Geneva (9,1); and Neuchâtel (9.1).

On the other hand, Zurich’s increase will be below the national average — 8.3 percent.

And  Basel-City’s residents, along with Appenzell-Innerrhoden’s, will be able to enjoy the country’s lowest increase: 6.5 percent.


In 2024, these tariffs will increase by an average of around 18 percent for households

However, here too, these prices could be higher or lower than the national average in individual cantons and municipalities.

Zurich residents, for example, can expect a 24.5-percent increase, in Geneva rates will go by 28.6 percent, and in Vaud, which has many electricity suppliers, hikes will range from 32 to over 40 percent.

This government map shows by how much electricity prices will go up in your community. 


After seeing their rents increase by 3 percent in October, many tenants will be hit by another 3-percent hike in April, after the Federal Housing Office announced that it is raising the reference mortgage rate, which is used to determine rents, from 1.50 to 1.75 percent.

This means that if your rental contract is based on the reference rate, your rent will go up.

About 54 percent of rental contracts in Switzerland are based on the reference rate.

Regionally, however, even a larger number of rentals are affected.

In the Zurich area, as well as in central Switzerland, for instance, more than 60 percent of rental contracts are based on a reference rate.

In the Bern region, as well as in northwestern parts of the country, that proportion is just over 53 percent, while in the western and southern cantons (which include Geneva and Vaud), less than half of rental contracts are tied to the reference rate.

READ ALSO: Switzerland sees new rent hike but will yours go up? 

Public transportation

From December 10th, when the new train timetable kicks off in Switzerland, the new (higher) tariffs will go into effect as well.

For the first time in seven years, the price of GA Travelcards —  annual subscriptions that give commuters access to Swiss public railways, post buses, public boat services, as well as the urban local transport in buses and trams — will increase by about 4.3 percent.

READ ALSO: How the Swiss Travelcard will get more expensive 

Now for the good news: prices that are expected to drop

Economists interviewed by 24 Heures Lausanne daily newspaper say that consumers will pay less for heating oil, fruits, and vegetables; other products could become cheaper as well.

If you like travelling, you will be glad to know that hotel prices, as well as those of international package holidays will also be less expensive.   

Last but not least, a new law that comes in to force on January 1st, 2024, will lower the price of some imported merchandise sold in Switzerland.

From that date, import duties on almost all industrial products will be abolished, which means that goods such as bicycles, cars, household appliances, clothing, and footwear will no longer be subject to customs duties when imported into Switzerland.

Consequently, their prices will drop.

READ ALSO: What will happen to the Swiss economy in 2024?