Swiss Franc Stabilizes as Inflation Eases, Rate Hike Possible
The Swiss franc has stabilized at about 0.91 against the USD, recovering from significant losses earlier in the year that dropped to a six-month low. This change happened due to substantial differences in the anticipated monetary policies of the US and Switzerland. In March, Switzerland's yearly inflation rate decreased to a low of 1%, not seen in over two years, reinforcing the Swiss National Bank’s (SNB) statement that inflation pressures are easing.
This comes as business optimism declines and retail sales shrink, prompting speculation that the SNB might increase interest rates in its next meeting in June. Previously, the franc fell sharply when the SNB unexpectedly cut rates in March, becoming the first major central bank to do so amid current global inflation concerns.
Additionally, with a more stable inflation forecast, the central bank has been able to reduce its support for the franc, leading to an increase in foreign currency reserves for the third consecutive month since hitting a seven-year low in November.