Franc plumbs five-month trough after Swiss inflation data

Swiss franc tumbled in European trade against a basket of major rivals, resuming losses against the dollar and hitting a five-month trough at 0.91 franc per dollar.

The decline came after official Swiss inflation data showed prices hit 33-month lows, which proves the Swiss National Bank has won its battle against inflation. 

It also opens the door for more Swiss interest rate cuts this year, following the surprise cut in March by 25 basis points.

 Prices 

The USD-CHF pair rose 0.5% to 0.9074, with a session-low at 0.9022, after closing up 0.6% on Wednesday away from a five-month low at 0.9095 franc per dollar. 

Swiss Inflation

Earlier data showed Swiss consumer prices rose 1% y/y in March, the lowest rate since September 2021, and below estimates of 1.3%.

On a monthly basis, consumer prices were flat last month, below estimates of a 0.3% increase.

The SNB 

The data showcases the success of the Swiss National Bank’s measures to curtail inflation, and will likely lead to further interest rate cuts this year. 

The Swiss National Bank surprised the markets today with a 0.25% interest rate cut to 1.5%, while most analysts expected no change in policies. 

The decision comes as Swiss inflation hit 1.2% in February, the ninth month in a row of sub 2% inflation rates. 

The SNB said that cutting rates has become possible as efforts to combat inflation in the 2-⅕ years beared fruit. 

Thomas Gordon 

SNB Governor Thomas Gordon said it’s likely that inflation will remain at target levels in the next few years.

He said that measures taken to control inflation have proven effective, with the central bank open to change policies once more if needed. 

Swiss Rate Prospects 

Following the inflation data, the odds of an SNB interest rate cut at the June meeting surged to above 90%.