Cooling inflation in Switzerland reduces pressure on the SNB to adjust rates, weighing on the Franc amid stable USD demand.
The Swiss Franc weakened after July inflation fell to 0.4%, its lowest level in four months, down from 0.5% in June. The slowdown reflects limited pass-through from energy prices, defying the Swiss National Bank’s expectations of a modest near-term pickup.
The SNB held policy rates at 0.00% last month, citing subdued price dynamics. Analysts note the central bank has ample room to maintain this stance, with no immediate need for rate cuts unless banking sector stress emerges. The Franc has underperformed G10 peers this quarter.
USD/CHF traded near 0.8100 in Asian hours, with muted movement as the US Dollar stabilized amid geopolitical tensions. The SNB is expected to keep rates unchanged through year-end, though further cuts remain a contingency.