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21 March 2024 | FXGT.com

Swiss National Bank’s Unexpected Rate Cut Drives USD/CHF to Multi-Month Highs

  • SNB Responds to Economic Slowdown: In a surprising move, the Swiss National Bank reduced its interest rate by 25 basis points to 1.50% during today’s meeting, becoming the first major central bank to adjust rates downwards in response to the current inflation environment.
  • Inflation Within Target Range: The rate cut comes as a response to significant declines in inflation and economic growth observed over the past year, with the SNB setting an inflation forecast of 1.9% for 2024, against the current rate of 1.2%.
  • February CPI Increase Noted in Switzerland: Despite the overall low inflation rate, Switzerland experienced a notable increase in its Consumer Price Index in February, recording a 0.6% rise, a jump from the previous month’s 0.2% increase.
  • Immediate Market Response to SNB Rate Cut: After the Swiss National Bank’s unexpected rate cut, the Swiss franc significantly weakened against the dollar and euro, highlighting the market’s quick reaction. For the day, both USD/CHF and EUR/CHF pairs increased by approximately 1%.
  • Swiss Franc’s Decline to Multi-Month Low: The unexpected rate cut has driven the USD/CHF pair to climb to new highs, reversing the previous day’s decline influenced by the Federal Reserve’s meeting. The Swiss franc fell to its weakest point against the US dollar since November 2023.
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