The EUR/CHF currency pair held close to a 6-week high of 0.9228 on Wednesday ahead of the outcome of the European Central Bank’s policy meeting.
The ECB is largely expected to raise its main refinancing operations rate by 25 basis points to 2.40% at its June 11th meeting.
And, the ECB deposit facility rate is expected to be raised to 2.25%.
This move would make the central bank the first among its major peers to tighten policy in reaction to a surge in energy prices linked to the conflict in the Middle East.
ECB Executive Board member Isabel Schnabel had said that the central bank should move ahead with an interest rate hike in June, even if US peace talks with Iran are successful. She highlighted that the conflict had lasted significantly longer than anticipated and that elevated energy prices were increasingly affecting the wider economy.
And, ECB policy maker Francois Villeroy de Galhau again underscored that the central bank “will do what is necessary” to ensure inflation remains in line with its target.
Following the decision, ECB President Christine Lagarde is scheduled to hold a press conference to present the monetary policy statement and respond to questions from journalists. Any signals of a more aggressive tightening path or firm anti-inflation stance from ECB officials could offer additional near-term support to the Euro.
On the Swiss side, inflation data have contributed to a subdued outlook for the Swiss Franc. Switzerland’s CPI inflation registered 0.6% for May, below the 0.8% market consensus. The weaker-than-expected figure has diminished prospects of any near-term rate hike by the Swiss National Bank.
SNB Chairman Martin Schlegel has reassured markets that medium-term inflationary pressures remain entirely stable. In light of this relatively mild inflation backdrop, investors widely anticipate that the SNB will keep its benchmark interest rate unchanged at 0% through 2026.
The EUR/CHF currency pair was last up 0.15% on the day to trade at 0.9224.
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