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19/06/24
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CHF Flat Before Rate Decision By SNB
On Wednesday, the Swiss franc was nearly unchanged, and USD/CHF traded at about 0.8838, down 0.04% for the day in the North American session.
The central bank of Switzerland will announce its rate decision on Thursday and the markets are jittery. The previous SNB meeting was in March and policymakers shocked the markets by cutting rates by 0.25%, taking the cash rate to 1.50%.
Although investors had anticipated the SNB would keep rates unchanged at the previous meeting, the central bank responded to inflation and growth declining and was the first major central bank to cut rates this year.
The Swiss franc dropped 1.2% versus the US dollar after the March meeting, the 2nd-to-worst daily performance this year. Although the currency lost more ground thereafter, it has now managed to recover almost completely.
Economists are split evenly on whether the SNB will cut rates on Thursday, and money markets have reduced expectations of a rate cut to 60%, versus 80% a month ago. The cautious SNB has not made any public comments over the last 3 weeks, which has ramped up the suspense.
Swiss growth has been steady, and inflation has been hovering in the upper part of the SNB’s target of between 0% and 2%. This may support the case for keeping rates unchanged.
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