SNB Three-Month Target Libor Rate Switzerland
The target interest rate set by the Swiss National Bank (SNB). Adjusting the Three-Month Target Libor Rate is the primary monetary policy instrument of the Swiss National Bank.
The bank often raises rates to control inflation and reduces the rate to spur economic growth. Because rate changes affect the costs and returns for consumer loans, mortgages, bank yields and bond rates, the decision has huge influence on the economy and financial markets. The Financial sector is a relatively large part of the Swiss economy. Consequently Libor rate changes can affect the profitability of a significant part of Switzerland economy and affect the value of the Swiss Franc. Increasing Libor rates increases the demand for the Swiss Franc (an appreciating weight) where rate decreases lessen demand.
The Bank current inflation target is 2 percent, and it increases and decreases rates accordingly in pursuit of that goal.
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