Switzerland: Selected Issues
IMF Staff Country Reports, June 24, 2024
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- Switzerland: Selected Issues
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Bibliographic details
- Published: June 24, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400279164.002
Transmission of monetary policy to financial conditions
- Transmission of policy rates to market rates has been swift.
- The exchange rate is an important channel through which monetary policy affects financial conditions.
- Policy rate adjustments affect the average interest rates of mortgages and thus the mortgage reference interest rate, which is a factor for rent adjustments under Swiss regulation.
Effects on real activity and the housing market
- The response of real activity to tightening financial conditions has remained broadly in line with past tightening episodes.
- Monetary tightening has contributed to a slowdown of private credit and house-price growth.
- Growth of mortgage loans, which represent 85 percent of bank lending, moderated to 2.4 percent in 2023 from 3.5 percent in 2022.
Household cash flows and rental costs
- The interest rate increase has influenced cash flows for households due to higher mortgage interest expenses.
- Higher interest rates also lead to higher rental cost for non-homeowners through the mortgage reference interest rate channel and rent adjustment rules.
Study scope and focus
- Examines the relationship between monetary policy, financial conditions, and real activity during the current monetary policy-tightening episode in Switzerland.
- Reviews various channels through which monetary policy changes affect financial conditions, emphasizing market-rate transmission and exchange-rate effects.
Source: Switzerland: Selected Issues, IMF Staff Country Reports 2024/180.
Content in this bundle
- Switzerland: Selected Issues; IMF Country Report No. 24/180; May 22, 2024