Swiss banks can handle more rate hikes: SNB

BLOOMBERG 

Switzerland’s lenders are strong enough to cope with possible additional interest-rate increases by the Swiss National Bank (SNB), its vice president, Martin Schlegel, told Schweiz am Wochenende.
Most lenders have sufficient capital buffers to
handle even an abrupt increase in borrowing costs, Schlegel said in an interview published in the weekly newspaper. While further monetary tightening could lead to more credit defaults, these remain rare in Switzerland, he added.
“Price stability has top priority,” Schlegel said. “At the moment, we don’t see any signs that the interest rate hikes pose a threat to financial stability.”
The SNB has raised rates by 250 basis points since last June to 1.75% and has sent strong signals that another hike will come at officials’ next scheduled meeting in September.
Although inflation in June dipped below the 2% ceiling the central bank is targeting, officials have warned this may not yet be permanent due to ongoing second-round effects.
The SNB expects consumer-price growth to average 2.2% both this year and next.