SNB cuts key policy rate by 25 bps to 1.50% from 1.75% previously

• Prior 1.75%
• Easing of policy made possible as fight against inflation has been effective
• Inflation likely to remain in the range below 2% over the next few years
• Today’s easing ensures that monetary conditions remain
  appropriate
• 2024 inflation seen at 1.4% (previously 1.9%)
• 2025 inflation seen at 1.2% (previously 1.6%)
• 2026 inflation seen at 1.1%
• Will adjust its
  monetary policy again if necessary to ensure inflation remains within the range consistent
  with price stability over the medium-term
• Full statement

I warned earlier this week that the SNB had the propensity to surprise, and they certainly did with their decision today. And not only did they surprise with a rate cut today, the forward guidance points to the notion that they may do so again in June. As inflation developments have been kind to the SNB, they have taken the bold step to act first before the others.

The franc has fallen considerably on the decision here with EUR/CHF rising from 0.9680 to 0.9760 currently. USD/CHF is also seen up over 1% to 0.8970 on the day.

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