.jpg)
Contrary to consensus expectations of no policy change, the Swiss National Bank (SNB) delivered another surprise interest rate cut of 25 basis points in this week’s announcement.
And this follows them Interest rate cut by 0.25% in March, which was also mostly unexpected. In its June statement, the Swiss National Bank also noted this “Ready to be active in the foreign exchange market if necessary.”
Link to the SNB’s official statement for June 2024
Policymakers estimated that overall inflation in Switzerland was mainly driven by higher domestic price pressures, but inflation abroad was likely to ease in the coming quarters. The central bank also expects only moderate global growth, which remains vulnerable to “significant risks” and a “renewed increase in geopolitical tensions.”
During the press conference, SNB President Jordan acknowledged the depreciation of the franc in the January-May period, but warned that the value of the currency had risen again in recent weeks, contributing to uncertainty about inflation expectations.
Link to the introductory remarks of the Swiss National Bank’s news conference
Market reactions
Swiss Franc against major currencies: 5 minutes
Overlay of the Swiss franc against major currencies Chart by TradingView
Franc pairs were in consolidation mode with a slight upward bias ahead of the SNB’s monetary policy decision, as the central bank was widely expected to keep interest rates unchanged.
For this reason, the easing decision turned out to be shocking, leading to a sharp decline for the Swiss currency across the board.
Another wave of declines followed during the SNB press conference, where the SNB President highlighted the currency’s appreciation in recent weeks due to political uncertainty in Europe, making traders wary of potential intervention moves.
Thus, the franc continued its decline in the next trading session, falling to its lowest level at 0.87% against the US dollar while reducing its losses against the Japanese yen at 0.29%.
Are you looking for your own place to record your market observations and trading statistics? If so, check out TRADEZELLA! It’s an easy-to-use blogging tool that can yield valuable insights into performance and strategy! You can easily add your thoughts, plans and track your psychological state with each trade. Click here to see if this is right for you!
Disclaimer: Babypips.com earns a commission from any signups through our affiliate link. When you subscribe using our affiliate links, it helps us maintain and improve our content, much of which is free and available to everyone – including Pipsology School! We appreciate your support and hope you find our content and services useful. Thank you!
