The rapid increase in interest rates poses a risk of financial accidents, as seen with the crisis of American regional banks and the collapse of Swiss bank Credit Suisse. Despite the quick rise in interest rates, there haven’t been as many accidents as expected. Experts are surprised by this and believe that decision-makers, like Jerome Powell, have learned from past experiences and are taking appropriate measures to prevent a recession. The US economy has actually grown by 4.9% from July to September, indicating its ability to withstand higher interest rates. While there have been some moderate losses in the stock market due to the uncertainty caused by the Middle East war, financial market participants do not anticipate a major escalation. When it comes to investment opportunities, there are both risks and chances for investors. Experts suggest focusing on the strength of companies for long-term investments in stocks. Swiss stocks have historically provided a 5.6% annual return after inflation from 1926 to 2022, with no losses on original investments for those holding stocks for a 14-year period. On the other hand, bonds have become more attractive due to higher interest rates, with investors achieving a 2% annual return after inflation from 1926 to 2022.However, there are concerns about the Swiss real estate market. A 1 to 1.5 percentage point increase in interest rates could lead to significant decreases in property prices, including in Switzerland. Homeowners should be aware of the potential financial obligations resulting from lower property prices. The recent surge in real estate prices has created a belief that this price level is sustainable and that there is no risk of a price collapse.Economist Tobias Straumann warns that the combination of high debt levels and a sudden increase in interest rates could create a dangerous situation. Despite the rise in interest rates, government debt remains high, posing a delicate situation for savers and investors.

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