SNB cuts rates by 25 bps, CHF reacts

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The Swiss National Bank (SNB) cut its key interest rate by 25 basis points to 1.25%, amid mixed global monetary policy stances. Two-thirds of economists predicted this move, leading to a weakened Swiss franc, with the Euro up 0.5% and the US dollar rising 0.7%. The SNB forecasts inflation at 1.3% for 2024, 1.1% for 2025, and 1.0% for 2026, with economic growth projected at 1% this year and 1.5% in 2025. Inflation held steady at 1.4% in May and is expected to average the same for 2024. Analysts suggest another rate cut may come in September, with potential for a fourth in December, leaving the Swiss franc vulnerable. Economic activity is expected to gradually improve, supported by stronger international demand. Observers are also watching the US Federal Reserve and Bank of England for potential rate changes, following the UK's recent inflation easing to its 2% target for the first time in nearly three years.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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