Swiss Franc Under Pressure, Weak Inflation Dampens Interest Rate Hike Expectations
The Swiss franc weakened to around 0.79 per US dollar on Thursday (June 4), approaching its weakest level since early April. This weakening occurred after weaker-than-expected Swiss inflation data eased expectations of an interest rate hike by the Swiss National Bank (SNB) this month.
Swiss annual inflation in May was recorded at 0.6%, still the highest level since December 2024, but below market expectations of 0.8%. Previously, Swiss inflation had been nearly flat at the start of the year, then began to rise slightly after the attack on Iran in late February, which sparked renewed concerns about global energy prices.
However, inflationary pressures in Switzerland are considered less severe than in the euro area. This is because Switzerland has a lower dependence on oil and gas, thanks to energy support from Alpine hydroelectricity and nuclear power. SNB Chairman Martin Schlegel also stated that although inflation has recently risen slightly, medium-term pressures remain relatively unchanged.
Investors now expect the SNB to maintain its benchmark interest rate at 0% until the end of the year. Meanwhile, the market continues to monitor geopolitical developments in the Middle East, including Iran's claim of targeting a US commando ship in the Gulf of Oman, the Republican-led US House of Representatives' vote to halt military action against Iran, and the conditional ceasefire agreement between Israel and Lebanon. (asd)
Source: Newsmaker.id
