The Swiss franc tumbled in European trade on Thursday against a basket of major rivals, plumbing four-month lows against the dollar and becoming the worst performing G8 currency after the SNB surprised the markets with a rate cut.

That makes the Swiss National Bank the first major G8 bank to start easing monetary policies as inflation falls below 2%.

USD/CHF

USD/CHF rose 1.2% to 0.8974, the highest since November 2023, after closing up 0.15% on Wednesday, the first profit in six days after the Federal Reserves policy meeting.

Worst Performing Currency

The franc is the worst performing G8 currency today, with a 1.2% drop against the US dollar, plumbing four-month lows, and a 1% drop against the euro, hitting eight-month lows.

It fell 1.1% against the pound to 1.1459, a nine-month trough, and it fell 1.2% against the yen, and 1.25% against the Canadian dollar, and 1.6% against the Australian dollar, plumbing six-month lows at 1.6859.

The SNB Surprises Markets

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 its 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.