London, June 22 (BNA) — The Swiss Franc fell on Thursday after the Swiss National Bank raised its benchmark interest rate, while the Norwegian Krone gained after a bolder move by the Bank of Norway.
According to Reuters, the Swiss National Bank raised its benchmark interest rate by 25 basis points to 1.75%, defying some market expectations for a larger increase.
Despite declining Swiss inflation, currently the lowest among G10 economies at 2.2%, SNB President Thomas Jordan recently reiterated his willingness to raise interest rates, encouraging markets to expect a 50 basis point increase.
But economists polled by Reuters expected the Swiss National Bank to raise interest rates by 25 basis points.
“Unlike the ECB (European Central Bank) and the Federal Reserve (Federal Reserve), the SNB can go slowly and steadily tightening its monetary policy,” said Thomas Getzel, chief economist at VP Bank Group in Liechtenstein.
“With interest rates rising today, the key rate and inflation rate converge. Thus, it was not necessary to raise the interest rate by 50 basis points,” he added.
And the Swiss franc fell 0.2% to 0.8945 against the dollar, away from the six-week high it touched last week.
The euro rose as much as 0.2% to 0.9828 francs.
The Norwegian crown rallied instead after the Bank of Norway raised its benchmark interest rate by 50 basis points to a 15-year high, more than expected by the majority of economists polled by Reuters, and said it aimed for another increase in August.
In an effort to curb inflation, Norges Bank raised interest rates to 3.75%, sending the crown up more than 1% against the euro and the dollar.
The Norwegian krone rose 1.1% against the dollar to 10.5310, heading towards the six-week high it touched last week.
Against the euro it rose 1% to 11.5820.
Economists polled by Reuters had expected a move of 25 basis points, but a minority of respondents expected the Bank of Norway to rise 50 basis points amid higher-than-expected growth in consumer prices and a brighter outlook for many Norwegian companies.
The yield on 3-year Norwegian government bonds rose 13 basis points to 3.94%. Sterling stood near a one-year high as markets expect the Bank of England (BOE) to raise interest rates again later in the day, after UK inflation held steady at 8.7% in May, defying market expectations and making it the highest among Any major company. Economy.
The Bank of England is set to raise interest rates for the 13th consecutive time, though traders are split between 25bp and 50bp.
The British pound settled today at $1.2766.
The dollar held near a one-month low against a basket of currencies, after Federal Reserve Chairman Jerome Powell offered a little room for surprise in his semi-annual testimony before lawmakers on Capitol Hill.
In remarks to lawmakers on Wednesday, Powell said further US interest rate increases are a “very good guess” of where the Fed will go if the economy continues in its current direction.
His comments were in line with what the central bank said at its policy meeting last week.
The US dollar index last settled at 102.07, not far from its five-week low of 102.00, after falling nearly 0.5% in the previous session.
Trading was thin in Asia with Hong Kong and China closed for a holiday.
The euro rose to a more than one-month high of $1.10030, extending from Wednesday’s jump of 0.65%.
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