Franc Drop Seen Short-Lived With SNB Running Out of Room to Cut
- Central bank surprised market with a half-point rate cut
- Currency’s losses following the decision quickly faded
Antoine Martin, board member of the Swiss National Bank (SNB), Martin Schlegel, president of the Swiss National Bank (SNB), Petra Tschudin, board member of the Swiss National Bank (SNB), left to right, at the bank's rate announcement news conference in Bern, Dec. 12.
Photographer: Stefan Wermuth/BloombergThe Swiss franc will resume its recent rally against the euro as the scope for further interest-rate cuts from the nation’s central bank is narrowing, analysts and strategists said.
The franc briefly fell to a two-week low versus the euro after the Swiss National Bank surprised markets by delivering a larger-than-expected half-point cut on Thursday, a move designed to stem the franc’s recent strength. But the currency quickly bounced and was unperturbed even after SNB President Martin Schlegel repeated his threat to bring rates to negative territory if warranted.