USD/CHF: SNB stuns markets with surprise rate cut, Franc tumbles
Swiss National Bank slashes rates 25 bps, sending franc into tailspin.
The Swiss franc plummeted on Thursday after the Swiss National Bank (SNB) unexpectedly lowered its benchmark interest rate by 25 basis points to 1.50%. The surprise move, which caught economists off guard, made the SNB the first major central bank to ease monetary policy aimed at combating inflation.
The decision marked the SNB's inaugural rate cut in nine years and came ahead of the planned departure of long-serving Chairman Thomas Jordan in September. The majority of analysts polled had anticipated the SNB would maintain rates at 1.75%.
Berto Tordecilla
Justifying the reduction, the SNB cited the effective fight against inflation over the past two and a half years. Swiss inflation eased to 1.2% in February, the ninth consecutive month within the central bank's 0-2% target range for price stability.
"The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective," the SNB stated, adding that inflation is expected to remain within the target range in the coming years.
The surprise move triggered a broad sell-off in the Swiss franc. The USD/CHF currency pair surged 1% to trade at $0.8952, up from $0.8838 prior to the announcement.
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