Important central banks in the Western world made different monetary policy decisions on Wednesday evening and Thursday. The central banks are likely to have reached the interest rate peak soon, but the door for further tightening remains open.

The US Federal Reserve Bank and the Swiss National Bank SNB did not raise their interest rates any further, and the British monetary authorities also left the current rate at the same rate. The Swedish and Norwegian central banks, however, continued to raise interest rates. The Turkish central bank has once again significantly raised the key interest rate in view of extremely high inflation.

The key interest rates were raised sharply last year and this year in order to combat inflation, which has also risen significantly as a result of the war in Ukraine. Now growth concerns are coming to the fore now that inflation has eased. However, increased oil prices are creating new risks of inflation.


As expected, the US Federal Reserve did not touch its key interest rate on Wednesday evening. It therefore remains in the range of 5.25 to 5.50 percent. However, interest rate forecasts signal a further increase this year. In addition, fewer interest rate cuts were promised for the next year. Fed Chairman Jerome Powell emphasized that data will determine action in the coming months.

The Swiss National Bank unexpectedly paused interest rates on Thursday. The SNB announced that the monetary policy, which has been significantly tightened over the last few quarters, is counteracting the inflationary pressure that is still present. From today’s perspective, however, it cannot be ruled out that further monetary policy tightening will be necessary to ensure price stability in the medium term.


The key interest rate in Switzerland is currently just 1.75 percent, which is significantly lower than in other Western countries. However, at 1.6 percent, inflation is currently within the SNB target range of 0 to two percent.

The British central bank also surprised experts by not raising its key interest rate further. It is still 5.25 percent, as the Bank of England announced in London. Economists had mostly expected further tightening. It would have been the fifteenth interest rate increase since the end of 2021. The key interest rate is currently at its highest level since the financial crisis of 2008.

Sweden and Norway

Both the Swedish and Norwegian central banks, however, increased their key interest rates by 0.25 percentage points each. In both Scandinavian countries at least a further increase was promised. Although here too, the increased interest rates are increasingly putting a strain on the economy.

Switzerland’s decision in particular caused price fluctuations on the financial markets on Thursday. The Swiss franc came under pressure against all major currencies. After all, financial market experts had largely expected an interest rate increase. The fluctuations in the Norwegian krone and the Swedish krona were limited because the decisions were expected.


The European Central Bank (ECB) increased the key interest rate again by 0.25 percentage points last week. However, ECB boss Christine Lagarde signaled that this could be the last interest rate increase. But she also did not close the door to a further increase and pointed to data developments.

Bundesbank President Joachim Nagel remains undecided on the question of the interest rate peak, even after the tenth ECB interest rate increase in a row. “Was that it with the key interest rate increases? Have we reached the plateau? That cannot yet be clearly predicted,” said Nagel, according to the text of the speech at the Sparda Banks Association Day in Frankfurt. “The inflation rate is still too high. And the forecasts still show only a slow decline towards the target value of two percent,” said Nagel. The ECB is aiming for this value for the euro area in the medium term. In August, consumer prices were 5.2 percent higher than in the same month last year. Core inflation excluding prices for energy and food was 5.3 percent in the euro area.

From the point of view of Federal Finance Minister Christian Lindner, combating stubbornly high inflation is the “first priority”. “Restoring monetary stability is crucial, not only for social cohesion, but also for economic development as a whole. Otherwise, our foundation will be undermined at some point,” said the FDP politician at a banking conference in Frankfurt, to which he was connected via video.

It is understandable for the federal government that the ECB has raised key interest rates in the euro area for the tenth time in a row, said Lindner: “Although we cannot now overlook the effects on the real economy – keyword: construction activity.”

Higher interest rates make loans more expensive, which can slow down demand and counteract high inflation rates. At the same time, more expensive loans are a burden for the already weakening economy.

In Turkey, the key interest rate will rise by 5.0 percentage points to 30.0 percent, as the central bank in Ankara announced. It was the fourth rate hike in a row. However, the key interest rate is still below the inflation rate, which rose to 58.9 percent in August.