The Swiss franc weakened to 0.95 per USD from the near three-month high of 0.94 hit on November 23rd as investors continued to assess economic data for hints on the tightening outlook for the Swiss National Bank. The Swiss economy expanded by 0.2% in the third quarter from the downwardly revised 0.1% in the second quarter, missing market expectations of a 0.3% growth and raising doubts on whether the SNB will remain with its hawkish outlook.
Chairman Jordan previously stated there is a high probability that the central bank will further tighten policy in the bank’s next decision, as current interest rates are low given the elevated inflation expectations.
Although price growth has recently slowed, promises of tighter policy were nonetheless made despite the fact that annual inflation in October was only 3%, significantly below both central bank estimates of 3.4% and the 29-year high of 3.5% in August.
At its most recent meeting, the SNB increased its policy rate by 75 basis points, pushing borrowing costs into positive territory for the first time since 2011.
