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 The Swiss franc is a currency that owes its popularity to its noteworthy stability for many years. Backed by one of the most resilient economies in Europe, perhaps even in the world, the Swiss franc is considered by some as a safe haven in times of economic turmoil.Last week, the Swiss National Bank (SNB) surprised economists by lowering interest rates unexpectedly. As most major central banks around the world still debate reducing borrowing costs, the SNB’s policymakers decided to move ahead with relaxing the central bank’s monetary policy.In this article, we will share more information on the SNB’s policy, the impact on the Swiss Franc, and analysts’ forecasts.
 SNB Reduces Interest RatesOn March 21st, the SNB’s governing council convened and announced its decision to lower borrowing costs by 25 basis points (bps) with the benchmark interest rate coming in at 1.5%. The SNB’s decision didn’t confirm the forecast of economists polled by Reuters who suggested that rates would be kept on hold.The post-meeting statement noted that “the easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective. For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability. According to the new forecast, inflation is also likely to remain in this range over the next few years.”On March 27th, the SNB’s head, Thomas Jordan, said that lower inflation pressure allowed the governing council to lower interest rates. Commenting on the SNB’s monetary policy, Jordan mentioned that the bank has reduced the size of the balance sheet which has allowed it to tackle inflation.On the same day, the SNB’s vice president, Martin Schlegel, reiterated that Switzerland’s central bank does not have a target range for the Swiss franc’s exchange rate and added that “the National Bank monitors the exchange rate closely and intervenes in the foreign-exchange market as necessary.”
 What Do Analysts Forecast About The Swiss FrancAs the Swiss franc tends to be a part of trading portfolios due to its stability and strength, analysts have scrutinized the SNB decision, trying to forecast its next moves.
 ING: Two More SNB Rate Cuts Possible In 2024Depending on the global economic environment, ING analysts forecast two more rate cuts this year for the SNB. In a report published on March 21st they wrote: “Unless there is a very nasty surprise in the international economic environment that causes inflationary pressures to rise sharply again, the SNB’s tone today and the huge downward revision to inflation forecasts suggest that a further cut is very likely in June to bring the key rate down to 1.25%. A further rate cut in September is also likely but will obviously depend on the central bank’s inflation forecasts at that time.”
 Rabobank: Swiss Franc Likely To Remain SoftCurrency analysts at Rabobank, one of the largest Dutch banks, see volatility rising around the time of US presidential elections that could impact the Swiss franc’s exchange rate against other major currencies. Depicted: Admirals MetaTrader 5 – USD/CHF Daily Chart.
Date Range: September 20th 2023 – March 28th 2024. Date Captured: March 28th 2024. Past Performance is not an indicator of future results.“The SNB’s decision to cut rates this month will likely further the probability that the CHF could be used as a funding currency particularly if the SNB signals that it is prepared to match ECB rate cuts this year. While there are several fronts from which demand for safe-haven could re-appear over the medium term and we do expect that volatility will rise towards the end of the year with the US election. That said, for now the CHF is likely to remain soft. We have brought forward our previous EUR/CHF six-month forecast of 0.9800 to a three-month view,” they noted in their report.
 Société Générale: SNB Cloud Lead The Franc To Further DepreciationAnalysts at the French Société Générale bank noted that the SNB was quicker to lower interest rates than the European Central Bank (ECB). In their note to investors, they point out that “Market views were divided but the chance for a cut was not negligible after much softer inflation in 1Q. No cut would have meant inflation undershooting the target. Even after today’s reduction, the first since 2019, inflation in Switzerland is still forecast to average only 1.4% this year, 1.2% in 2025 and 1.1% in 2026.” Depicted: Admirals MetaTrader 5 – USD/CHF Monthly Chart.
Date Range: January 1st 2013 – March 28th 2024. Date Captured: March 28th 2024. Past Performance is not an indicator of future results.As the SNB would like to see headline CPI inflation coming closer to the 2% target, Société Générale economists suggest that one more rate cut could take place in June, depending on market conditions. “In other words, don’t rule out further cuts to get inflation back up to target. The next one could come in June. Chair Jordan said the bank will adjust monetary policy again if necessary. That’s a recipe for steady Franc depreciation,” their report noted.  More By This Author:Australian CPI Falls, Japanese Yen Hits 34-Year LowBank Of Japan Exits Negative Rates: What’s Next?Markets Focus On Fed, BoE Rate Decisions, UK CPI Falls