Contrary to consensus expectations of no change in policy, the Swiss National Bank (SNB) delivered another surprise rate cut of 25 basis points in this week’s announcement.
This follows their 0.25% rate cut back in March, which was also mostly unexpected. In their June statement, the SNB also noted that they are “willing to be active in the foreign exchange market if necessary.”
Link to official SNB statement for June 2024
Policymakers assessed that overall inflation in Switzerland has been mainly driven by higher domestic price pressures but that inflation abroad is likely to ease in the next quarters. The central bank also expects only moderate global growth, which is still subject to “significant risks” and a “renewed increase in geopolitical tensions.”
During the press conference, SNB Chairman Jordan acknowledged the franc’s depreciation from January to May but warned that the currency gained in value once more in the past weeks, contributing to the uncertainty of their inflation forecasts.
Link to SNB News Conference Introductory Remarks
Market Reactions
Swiss Franc vs. Major Currencies: 5-min
Overlay of CHF vs. Major Currencies Chart by TradingView
Franc pairs were in consolidation mode with a slight bullish lean ahead of the SNB monetary policy decision, as the central bank was widely expected to keep rates on hold.
Because of that, the decision to ease turned out to be a shocker, leading to a sharp tumble for the Swiss currency across the board.
Another wave lower followed during the SNB press conference, as Chairperson Jordan highlighted the currency’s appreciation in the past weeks due to political uncertainties in Europe, keeping traders wary of potential intervention moves.
With that, the franc extended its decline in the next trading session, dropping to as low as 0.87% against the U.S. dollar while minimizing its losses to the Japanese yen at 0.29%.
Looking for your own spot to record your market observations & trading statistics? If so, then check out TRADEZELLA! It’s an easy-to-use journaling tool that can lead to valuable performance & strategy insights! You can easily add your thoughts, charts & track your psychology with each and every trade. Click here to see if it’s right for you!
Disclaimer: Babypips.com earns a commission from any signups through our affiliate link. When you subscribe to a service using our affiliate links, this helps us to maintain and improve our content, a lot of which is free and accessible to everyone–including the School of Pipsology! We appreciate your support and hope that you find our content and services helpful. Thank you!