The Euro (EUR) extended its decline against the Swiss Franc (CHF) on Wednesday, with EUR/CHF trading lower for a second straight session as Eurozone inflation data failed to provide fresh support for the common currency. At the time of writing, the pair trades around 0.9320 in the US session.
Eurozone inflation reinforces cautious ECB stance
Eurostat data showed that price growth in the Eurozone remained broadly steady in August, underscoring the European Central Bank’s (ECB) cautious approach.
Core Harmonized Index of Consumer Prices (HICP), which excludes food and energy, rose 2.3% year-on-year (YoY), in line with both forecasts and July’s reading. On a monthly basis, core inflation increased 0.3%, unchanged from the prior month, highlighting persistent underlying price pressures.
Headline inflation eased slightly to 2.0% YoY from 2.1% in July, coming in below expectations. Month-on-month, prices rose just 0.1%, missing forecasts for a 0.2% rise and slowing from July’s 0.2% increase.
The release followed last week’s ECB meeting, where policymakers left all three key interest rates unchanged and suggested policy is at or near terminal levels. While officials acknowledged progress in reducing inflation, they stressed the need to maintain restrictive policy for an extended period to ensure price stability.
Swiss inflation trends support SNB patience
In Switzerland, disinflation continues to deepen. The Producer and Import Price Index fell 0.6% in August, marking a sharp 1.8% annual decline. Broader inflation remains comfortably within the Swiss National Bank’s (SNB) 0-2% target range, reducing pressure for additional policy action.
SNB Chairman Martin Schlegel recently downplayed the likelihood of reintroducing negative rates but reiterated the central bank’s flexibility in adjusting policy if economic conditions warrant. The next SNB decision is set for September 25, with updated inflation forecasts and growth assessments expected to guide the policy outlook.
