Interest rates are expected to rise


The robust economic environment should enable interest rates to rise in Switzerland and the euro area in particular.

While short-term interest rates in Switzerland have risen by 25 basis points since the last assessment, the three-month Libor rate for investments in euros increased by 22 basis points from 3.68% in mid-December to 3.90% in mid-March. The interest rate differential between short-term Swiss franc investments and euro investments thus narrowed slightly from 1.68 percentage points in mid-December to 1.65 percentage points in mid-March.

In contrast with the second half of 2006, long-term yields in Switzerland increased between mid-December 2006 and mid-March 2007. The yield on ten-year Swiss Confederation bonds rose by 17 basis points in comparison with mid-December 2006 and stood at 2.61% in mid-March. The robust economic environment should enable interest rates to rise in Switzerland and the euro area in particular, while price losses on the stock markets and resulting higher demand for bonds have the opposite effect.


Swiss National Bank
6/7/2007 6:50:07 PM