The USD/CHF currency pair rebounded sharply from a 15-week low of 0.8755 on Thursday, after the Swiss National Bank cut borrowing costs, citing low inflationary pressures and “heightened downside risks” to inflation.
The SNB lowered its policy rate by 25 basis points to 0.25% at its March meeting, in line with market consensus. It has been the fifth straight rate cut in the current easing cycle, which brought borrowing costs to their lowest level since September 2022.
The central bank maintained its inflation forecast at 0.4% for this year and at 0.8% for both 2026 and 2027. Annual CPI inflation in Switzerland has slowed to 0.3% in February from 0.7% in November 2024.
At the same time, the SNB noted that the Swiss economy had achieved steady growth in late 2024, driven by services. It now projects GDP growth of 1% to 1.5% this year, supported by higher real wages and more accommodative monetary policy. Yet, outlook remains uncertain due to geopolitical and global trade risks.
The SNB decision came one day after the Federal Reserve kept its federal funds rate target range without change and flagged two potential interest rate cuts by the end of 2025.
The USD/CHF currency pair was last gaining 0.74% on the day to trade at 0.8837.
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