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by USDCHF Fundamental Analysis – The Swiss franc has maintained its value, hovering around 0.88 against the US dollar. This shows a positive shift from its three-month low point of 0.89, seen on February 13. The change comes as new signs of solid economic performance emerge. Specifically, Switzerland’s economy grew by 0.3% in the last quarter of the year. This growth is higher than what experts had predicted. It also matches the expectations set by the Swiss National Bank.
This economic upturn reduces the bank’s immediate need for interest rate reductions.
USDCHF Analysis 4-Hour Chart
Switzerland’s Inflation and Monetary Policy
Despite the strong economy, inflation in Switzerland is slowing down. The inflation rate dropped to 1.3% in January, which is lower than anticipated. It’s the smallest it has been in more than two years. This decrease is notable even though most people expected higher inflation rates. This was expected due to changes in electricity subsidies and updates to the value-added tax system.
However, this drop in inflation means the central bank is less pressured to change interest rates soon. Yet, more than half of market observers expect the Swiss National Bank to lower rates in March.
USDCHF Fundamental Analysis: Central Bank Decisions
The economic indicators in Switzerland show mixed signals. On one side, there is significant economic growth. This growth aligns with what the Swiss National Bank had forecasted. On the other side, the inflation rate is lower than what many had predicted. This low inflation happens as the country changes its tax system and reduces electricity subsidies.
Despite these lower inflation figures, many in the financial market are still preparing for a possible rate cut by the central bank next month. This situation illustrates the delicate balance the Swiss National Bank must maintain between supporting growth and controlling inflation.
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