EUR/CHF remained stable after the Swiss National Bank (SNB) reduced the policy rate by 25 basis points to 0.25%. The SNB indicated it would continue to adjust its monetary policy as necessary to maintain inflation within acceptable limits.
The forecast suggests a final cut of 25 basis points is expected in June, potentially lowering the policy rate to 0%. The SNB noted that risks to the inflation and growth outlook are biased towards the downside.
Market Reaction To SNB Rate Cut
The fact that the Swiss National Bank has already lowered rates without a noticeable impact on the euro-franc pair suggests that market participants had anticipated the move. Traders often react more to surprises than to expected shifts, and with another cut projected in June, positioning could remain relatively stable unless new information emerges.
Maintaining inflation within an acceptable range remains the SNB’s primary goal. By acknowledging that inflation and growth risks lean towards the downside, policymakers signal that further reductions could be appropriate if economic conditions weaken. However, a move beyond the expected 0% policy rate would likely require a stronger downturn.
For those navigating derivatives, the calm response of EUR/CHF implies existing expectations are well anchored. If domestic economic indicators—such as inflation prints or employment figures—deviate from forecasts before the next policy meeting, short-term volatility could follow. Adjusting exposure accordingly might be worthwhile.
External Factors Affecting EURCHF
Rate expectations are not the only factor influencing the pair. External developments, including shifts in European Central Bank policy, could alter demand for the franc. Should the ECB lower rates more aggressively than expected, downward pressure on the euro might materialise. In contrast, if global uncertainty increases, demand for the Swiss currency as a safe-haven asset could strengthen regardless of rate moves.
While the SNB has expressed a willingness to act further, the market’s response suggests traders will need stronger signals before adjusting positions en masse. Until then, incremental policy changes will likely be absorbed with limited disruption.
