SNB cuts key policy rate by 25 bps to 1.00% from 1.25% previously

• Prior 1.25%
• Prepared to intervene in FX market as necessary
• Inflation pressures have again decreased significantly compared to the previous quarter
• That reflects the appreciation of the Swiss franc over the last few months
• Stronger franc partly contributed to downward revision in inflation forecasts
• Inflationary pressure abroad is likely to continue to ease gradually over the next quarters
• Further rate cuts may be necessary to ensure price stability over the medium-term
• Sees 2024 Swiss economic growth at around 1.0% (unchanged)
• Sees 2025 Swiss economic growth at around 1.5% (unchanged)
• Sees 2024 inflation at 1.2% (previously 1.3%)
• Sees 2025 inflation at 0.6% (previously 1.1%)
• Sees 2026 inflation at 0.7% (previously 1.0%)
• Full statement

The Swiss franc has gained slightly on the back of the decision here, with markets having priced in a 50-50 call more or less coming into today. EUR/CHF fell from around 0.9488 to a low of 0.9433 before keeping around 0.9463 currently.

The SNB isn’t really pushing too hard against a stronger franc though, as they don’t go as far as to label it as being “overvalued” again.

They’re just reaffirming their commitment to stay active in the FX market, as and when necessary.

And with the latest inflation forecasts, it is pretty much a case of the SNB officially declaring full victory in the inflation battle.

This article was written by Justin Low at www.forexlive.com.