Swiss Franc Strength Fades Amid Inflation Hike Expectations
The Swiss Franc (CHF) has been performing well in recent times, but its strength may be short-lived. According to Brown Brothers Harriman's (BBH) Elias Haddad, CHF is the second-best performer today after the Japanese Yen, thanks to a surprise increase in inflation that reinforces expectations of an interest rate hike from the Swiss National Bank (SNB). The August inflation data showed headline CPI rising to 0.8% year-over-year, above the SNB's forecast of 0.6% and the highest since September 2024.
The CHF has been facing some headwinds due to low interest rates and contained inflation, which remain a challenge for the currency in the coming quarter. Despite this, markets still expect the SNB to raise rates by 25 basis points only in June 2027, with the swaps curve fully pricing in this outcome.