Despite Credit Suisse crash, Swiss National Bank raises interest rate by 50 basis points

Days before its collapse and subsequent bailout, Credit Suisse claimed to be conservatively positioned against interest rate risks. This came after the SVB collapse was blamed on US Federal Reserve's rate hikes, which tightened credit conditions and triggered a decline for bonds.

After the same domino effect pushed Credit Suisse off balance, the Swiss National Bank has once again raised interest rates by 50 basis points.

The rate hike for tackling inflation shortly after Swiss regulators brokered a bailout for Credit Suisse, is even higher than US Federal Reserves 25 basis points hike.

Apart from US and Switzerland, the Bank of England is also set to raise interest rates in the face of relentless inflation, which means more stress on the horizon for lenders.

Credit Suisse, which is now merged with its own rival UBS, had also claimed that it was hedged against such stress from interest rates, just days before it succumbed.

Apart from Switzerland, Norway has also raised interest rates, and the chain reaction is expected to trigger a similar hike by the Reserve Bank of India.

Although public sector bank stocks in India continue to be bogged down, the RBI will probably raise interest with inflation above its tolerance level of 6 per cent.

With persistent inflation and a looming recession already making its presence felt, central banks and lenders are still stuck between a rock and a hard place.

Published on: Thursday, March 23, 2023, 04:57 PM IST