Economic Buzz: Conflict in Middle East has led to higher volatility yet overall reaction muted, says SNB

Swiss National Bank (SNB) has noted in its latest financial stability report that global economic growth was solid going into 2026, but has slowed somewhat since the escalation in the Middle East. Long-term interest rates have increased against the backdrop of renewed inflationary pressure, due to the recent surge in energy prices, and high public debt in many advanced economies. In Switzerland, by contrast, both inflation and long-term interest rates have remained at lower levels. The central bank of Switzerland also noted that in financial markets, the conflict in the Middle East has led to higher volatility, yet the overall reaction has been muted. Global stock prices temporarily declined but remain above the levels at the time of publication of the last Financial Stability Report. Furthermore, global corporate and sovereign credit risk premia temporarily increased to a moderate degree but remain at low levels. Residential real estate prices have increased both globally and in Switzerland.

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