Weak Swiss inflation paves the way for further rate cuts
Swiss inflation slowed to 1.1% y/y in August from 1.3% the previous month, below the 1.2% expected. In April and May, the rate of price increases rose to 1.4% y/y but later started to fall again, losing 0.2% in the last three months.
The Swiss National Bank cut its key interest rate twice, in March and June. However, the combination of a further slowdown in price growth and an appreciating CHF opens the door for further monetary easing.
USD/CHF is back below 0.8500, its lows at the beginning of the year. The pair plunged into this area then, as it has now, on the back of rising expectations of a Fed rate cut. At the same time, earlier policy easing in Switzerland did not significantly weaken the franc.
The strength of the franc, which only fell below its current level in 2011, could encourage the monetary authorities to take more aggressive steps to curb the growth of the national currency, including warnings or actual currency intervention.
Too strong a franc hurts the economy by making exports less competitive, which could be a problem for Switzerland's open economy.
By the FxPro Analyst Team
Central Bank Divergence and Easing Iran Tensions Reshape Currency Markets | 26th October, 2026
Weak Tech Earnings Pressure the US Dollar as Central Bank Divergence Shapes Forex Markets | 23rd October, 2026
Precious Metals Rebound as Softer Dollar and Easing Inflation Fears Support Markets | 9th October, 2026
Fed Rate Bets Pressure Major Currencies | 29th September, 2026
Dollar Strength and Fed Divergence Shape Markets Ahead of US NFP | 28th September, 2026
Central-Bank Divergence Reshapes Global FX as Risk Appetite Improves | 22nd September, 2026
US100, USDCHF, BTCUSD
