SNB interest rates
The SNB introduced interest rate targeting in 2000. The graph below shows “policy rates” for the SNB and the Federal Reserve and the deposit rate for the ECB since 2000.1 Since the SNB sets interest rates quarterly, quarterly data is used.
The SNB’s monetary policy is influenced by the outlook for inflation and economic activity in Switzerland. Capturing that outlook in a few data series and in real time is difficult. For instance, when Lehman Brothers collapsed in September 2008 or when Covid started in early 2020, it was immediately clear that the outlook had worsened dramatically. Yet, because of collection and publication lags, it took some time before those events showed up in the data.
However, the Fed, the ECB and many other central banks react immediately to such changes in the outlook. In a statistical study of the SNB’s interest rate decisions, one can therefore use changes in ECB and Fed policy rates to measure changes in the outlook for Switzerland. We do so below.
The graph below shows that the major swings in all three policy rates coincide with easily identifiable shocks: the bursting of the dot.com bubble in the early 2000s, the collapse of Lehman Brothers that triggered the Global Financial Crisis, and the surge in inflation after Covid that led all three central banks to sharply raise interest rates from the spring of 2022 onward.