According to inflation data: Swiss franc fell to the lowest level of the year

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One US dollar currently costs about 88.1 cents. Before consumer prices were released, the US dollar-franc currency pair was still trading half a cent lower. The price of the euro against the franc increased from 94.3 centimeters to 94.7 centimeters previously.

Consumer prices in Switzerland increased by 1.3 percent in January compared to the previous year. Economists surveyed by the AWP news agency had previously expected a significantly higher inflation rate of between 1.5 and 2.2 percent.

Is the SNB’s inflation forecast too high?

“The sharp decline in overall inflation in Switzerland in January means that the inflation rate will definitely fall behind the SNB’s 1.8 percent forecast for the first quarter,” the first comment said. This raises expectations that the SNB could become the first central bank among G10 countries to cut interest rates this monetary policy cycle.

A possible interest rate cut will widen the interest rate gap between Switzerland and other currencies, especially the Eurozone and the USA. This leads to the devaluation of the franc against similar currencies. In other words: if interest rates fall, the franc becomes cheaper. (SDA/smt)

Source :Blick