Swiss Central Bank's Stance Could Weigh on Franc -- Market Talk
Unafraid of the prospect of a Swiss National Bank interest rate cut, safe-haven demand pushes the Swiss franc higher.
At the beginning of this week, a wave of risk aversion swept the market, pushing up the Swiss franc and offsetting the impact of further interest rate cuts, and triggering calls for the Swiss National Bank to take further action to cool the franc. The Swiss franc rose to its highest level in nearly a decade against the euro on Monday, following its best performance since early 2022 last week. On Wednesday, Switzerland's largest manufacturing lobbying group called on the central bank to take swift action to prevent the franc's strength from hurting exporters and jeopardizing the economic recovery. The revival of the Swiss franc as a safe-haven asset was due to a combination of factors, including concerns about the US economic recession, geopolitical tensions, and the severe turbulence in the Japanese market.
Swiss National Bank's interest rate cut cycle is nearing its end: economists predict the last rate cut will be in September.
According to a survey conducted from July 5th to 11th, the Swiss National Bank's last interest rate cut of 25 basis points will take place in September. Prior to this, the bank had already cut interest rates twice in March and June.
Second rate cut! The Swiss National Bank announced a 25 basis point cut.
Will there be a third interest rate cut this year?
Swiss National Bank cuts interest rates again in the hope of supporting the economy and curbing the rise of the Swiss franc.
Swiss National Bank has once again cut interest rates to ease economic constraints and suppress the rise of the Swiss franc, in stark contrast to the hesitancy of other central banks around the world to loosen policies. On Thursday, the Swiss National Bank lowered its benchmark interest rate by 25 basis points to 1.25%, which was previously seen as an unpredictable decision by observers. Some investors bet that the bank would cut interest rates, while a slight majority of economists surveyed by Bloomberg expected the central bank to maintain interest rates. In a statement, the Swiss National Bank stated that "potential inflationary pressures have fallen again compared to the previous quarter." After the interest rate decision was announced, the Swiss franc fell, falling by about 0.4% against the euro and the US dollar.
SNB Cuts Deposit Rate to 1.25%, as Expected