Cuts Rates by 25bps, CHF Sold

The Swiss National Bank cut rates by 25bps to 1.25%, against split market expectations between a cut and a hold today.

Statement highlights:

• SNB is also willing to be active in the foreign exchange market as necessary.
• The underlying inflationary pressure has decreased again compared to the previous quarter.
• Higher inflation in rents, tourism services and oil products has contributed in particular to this increase. Overall, inflation in Switzerland is currently being driven above all by higher prices for domestic services.
• Taking into account today’s policy rate cut, the new conditional inflation forecast is similar to that of March. Over the longer term, it is slightly below the previous forecast.
• Inflationary pressure abroad is likely to continue to ease gradually over the next quarters. [...] However, for the coming quarters the SNB expects only moderate growth in global economic activity by longer-term comparison.
• Growth is likely to remain moderate in Switzerland in the coming quarters. The SNB anticipates GDP growth of around 1% this year.

All-in-all, relatively little in the statement or fresh forecasts of note, with markets responding to the partially-priced rate cut with a ~70 pip rally in EUR/CHF - new daily highs printed at 0.9550 (and still pressing at typing).