Swiss National Bank Raises Rate
Jun. 15, 2000
ZURICH, Switzerland (AP) _ The Swiss National Bank on Thursday raised a key interest rate by half a percentage point, following last week's rate hike by the European Central Bank.
The new target range of the three-month London Inter-Bank Offered Rate, also known as LIBOR, will be between 3 and 4 percent, the Swiss central bank announced. The hike, from between 2.5 and 3.5 percent, was widely expected.
LIBOR represents what the most creditworthy international banks charge one another for large dollar-denominated loans. The Swiss bank started using the rate at the beginning of the year as its key reference rate, replacing the discount rate.
The bank said it would target the middle of the new range, meaning its target for the LIBOR rate will be around 3.5 percent, up from around 3.0 percent.
The national bank said it has now guided the three-month LIBOR rate 1.75 percentage points higher since the start of the year.
This ``should ensure that the economic upswing doesn't permanently jeopardize price stability in Switzerland in the coming years,'' the SNB's statement said.
The European Central Bank last Thursday boosted its key interest rate by a half-point to 4.25 percent. Switzerland, which is not an EU member, is surrounded by countries that have adopted the euro as their currency.