The Swiss franc continues its rally and is currently trading in North America at 0.9193, or 0.37%. USD/CHF dropped 200 points in one week.
SNB approves oversize hike
Today, the Swiss National Bank raised rates 50 basis points. The cash rate now stands at 1.50%. The decision on whether the SNB would increase rates by 25 bp or 50 bp was up in the air. In the end, policymakers chose to raise rates more. Both moves were supported by strong arguments. Inflation in Switzerland rose to 3.4% in February. This is the highest level since 1993. These levels are still very low in comparison to other major economies. However, they are higher than the target of 0%-22% which supported a 50-bp rise. The market turmoil caused by the banking crisis gave the SNB an opportunity to opt for a 25-bp increase, if desired.
Jordan, head of SNB, stated after the rate decision that Credit Suisse was saved from financial disaster by UBS. Jordan stressed that financial stability can only be maintained if the merger is smooth. The SNB has been very busy recently, providing $53 million for the takeover and signing a coordinated move of six central banks to…