Breaking: SNB surprises with a 50 bps cut to Sight Deposit Rate

Dhwani Mehta FXStreet

Following Thursday's quarterly monetary policy assessment, the Swiss National Bank (SNB) cut the benchmark Sight Deposit Rate by 50 basis points (bps) to 0.50% from 1.00%.

The decision surprised markets, as they expected a 25 bps rate reduction to 0.75% in the quarter to December.

Summary of the SNB policy statement

Banks’ sight deposits held at the snb will be remunerated at the snb policy rate up to a certain threshold, and at 0% above this threshold.

Also remains willing to be active in the foreign exchange market as necessary.

SNB will continue to monitor the situation closely, and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.

The forecast for Switzerland, as for the global economy, is subject to significant uncertainty.

Developments abroad represent the main risk.

Uncertainty about the economic outlook has increased in recent months.

The future course of economic policy in the us is still uncertain, and political uncertainty has also risen in Europe.

It cannot be ruled out that inflation could remain higher than expected in some countries.

In this environment, unemployment should continue to rise slightly, while the utilisation of production capacity is likely to decline somewhat.

Sees 2024 Swiss GDP at around 1.0% (previous forecast was for around 1.0%).

Sees 2024 inflation at 1.1% (previous forecast was for 1.2%).

Sees Q3 2027 inflation at 0.7%.

Sees 2025 inflation at 0.3% (previous forecast was for 0.6%).

Sees 2026 inflation at 0.8% (previous forecast was for 0.7%).

Sees 2025 Swiss GDP at around 1.0-1.5% (previous forecast was for around {1.5 percent).

Market reaction to the SNB interest rate decision

The USD/CHF pair rebounded firmly to test 0.8900 in a knee-jerk reaction to the SNB interest rate decision before easing to 0.8875, where it now wavers. The pair is down 0.48% on the day.

Swiss Franc PRICE Today

The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the weakest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.18%	-0.15%	-0.14%	-0.18%	-0.62%	-0.34%	0.29%
EUR	0.18%		0.03%	0.03%	0.00%	-0.43%	-0.16%	0.47%
GBP	0.15%	-0.03%		0.02%	-0.03%	-0.47%	-0.19%	0.44%
JPY	0.14%	-0.03%	-0.02%		-0.05%	-0.48%	-0.24%	0.43%
CAD	0.18%	-0.01%	0.03%	0.05%		-0.44%	-0.16%	0.47%
AUD	0.62%	0.43%	0.47%	0.48%	0.44%		0.29%	0.91%
NZD	0.34%	0.16%	0.19%	0.24%	0.16%	-0.29%		0.64%
CHF	-0.29%	-0.47%	-0.44%	-0.43%	-0.47%	-0.91%	-0.64%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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