Two European countries work hard to cool down inflation

On June 22, the Bank of England (BoE) and the Swiss National Bank (SNB) decided to raise interest rates to deal with issues related to inflation.

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The Bank of England and the Swiss National Bank continue to raise interest rates. (Source: Reuters)

Specifically, the BoE decided to raise interest rates by 0.5 percentage points, from 4.5% to 5%, the highest level since 2008 and this interest rate hike also recorded the strongest increase since February 2023.

Official figures released on June 21 showed that inflation in the UK remained at 8.7% in May 2023. Notably, core inflation excluding food and energy prices unexpectedly increased from 6.8% to 7.1%, the highest level since 1992.

Analysts have warned that the BoE could raise its key interest rate to 5.75% or even 6% early next year if inflation shows no sign of cooling significantly and the labor market remains hotter than expected.

High interest rates could push the UK economy into recession.

* Meanwhile, the SNB raised interest rates by 0.25 percentage points to 1.75%. This is the fifth consecutive increase and is seen as a move to address inflation issues in this European country.

Inflation in Switzerland fell to 2.2% last month, but remains above the SNB's target range of 0-2%.

The decision by the two banks to raise interest rates came after the European Central Bank (ECB) raised interest rates by 0.25 percentage points to 3.5%. The ECB signaled that further increases would follow.

Source