BRUSSELS (dpa-AFX) - The Swiss franc strengthened against other major currencies in the European session on Thursday, despite the Swiss National Bank reduced its policy rate by a quarter-point, citing easing inflationary pressures.
The bank decided to lower the SNB policy rate by 0.25 percentage points to zero percent. This was the sixth consecutive reduction.
Banks' sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold. The discount for sight deposits above this threshold remained unchanged at 0.25 percentage points.
'Inflationary pressure has decreased compared to the previous quarter,' the bank said. 'With today's easing of monetary policy, the SNB is countering the lower inflationary pressure,' SNB added.
Following the strong growth in the first quarter, the bank forecast economic growth to slow again and remain rather subdued over the remainder of the year. The bank expects the economy to grow in the range of 1 percent to 1.5 percent in 2025.
SNB Chairman Martin Schlegel stated that low inflation and mild price pressures had influenced the decision to cut rates, and that the bank will make its next move in September.
European shares traded lower as speculation grew over a possible U.S. involvement in the Israel-Iran conflict.
It is feared that a direct U.S. involvement in Israel's escalating air assault could trigger a wider regional conflict and impact the energy infrastructure in the West Asia region.
A U.S. attack on Iran would 'radically destabilize the entire situation,' warned Russia's deputy foreign minister.
In the European trading today, the Swiss franc rose to a 2-day high of 0.9362 against the euro, from an early low of 0.9419. The franc may test resistance around the 0.92 region.
Against the yen, the franc advanced to a 2-day high of 178.11 against the yen, from an early 1-week low of 176.76. The next possible upside target for the franc is seen around the 179.00 region.
The franc edged up to 1.0950 against the pound, from an early low of 1.1012. On the upside, 1.08 is seen as the next upside target for the franc.
Moving away from an early 8-day low of 0.8216 against the U.S. dollar, the franc advanced to 0.8156. The franc may test resistance around the 0.80 region.
Looking ahead, U.S. stock markets are closed in observance of Juneteenth holiday.
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