The Swiss franc tumbled in European trade on Thursday away from three-month highs against the US dollar, becoming the worst performing G8 currency today after the Swiss National Bank surprised the markets with another interest rate cut.

The SNB singalled its readiness to intervene in the forex market if needed, and in both directions.

The Price

The USD/CHF pair rose by over 0.8% to 0.8911, with a session-low at 0.8832.

Franc lost 0.1% against the dollar on Wednesday, the sixth profit in a row, away from three-month highs at 0.8827.

Biggest Loser

The franc became the worst performing major G8 currency today with sharp losses against all rivals, including a 0.8% loss against the US dollar, and a 0.5% drop against the euro, and a 0.5% drop against the Canadian dollar.

The SNB

The Swiss National Bank surprised the markets with a 0.25% interest rate cut today to 1.25%, while analysts expected no changes to policies.

The SNB has become the first major central bank to back off policy tightening, conducting interest rate cuts for the first time in nine years.

The SNB said that with todays rate cut, the bank is able to maintain appropriate monetary conditions.

The bank noted the drop in core inflation rates once more compared to the previous quarter.

Inflation Forecasts

The SNB is expecting inflation in 2024 to decline to 1.3% from 1.4% in previous forecasts.

It also expects 2025 inflation to drop to 1.1% from 1.2%, and to decline to 1% in 2026.

Thomas Gordon

SNB President Thomas Gordon said on Thursday the SNB will continue to monitor inflation closely and will mend policies accordingly.

He said the rise in francs value is due to political uncertainty, and he asserted the central bank will intervene when needed in to forex markets.