$USDE /CHF rises as US Dollar hold firms following Fed's steady rate decision
USD/CHF climbs as the US Dollar remains firm despite muted reaction to the Fed interest rate decision.
Fed holds rates steady in 11-1 vote; Governor Stephen Miran dissents in favor of a rate cut.
Swiss growth outlook downgraded as energy prices lift inflation expectations.
The Swiss Franc (CHF) trades on the back foot against the US Dollar (USD) on Wednesday, with USD/CHF snapping a two-day losing streak as a firmer Greenback lends support. Markets showed a limited reaction to the Federal Reserve’s (Fed) latest monetary policy announcement, where interest rates were kept unchanged, in line with expectations.
At the time of writing, USD/CHF is trading around 0.7908, up roughly 0.78% on the day. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 99.85, up 0.30% on the day.
The Fed kept its benchmark interest rate unchanged in the 3.50%-3.75% range in an 11-1 vote. Governor Stephen Miran dissented once again, favoring a 25 basis point rate cut.
Policymakers noted that economic activity continues to expand at a solid pace, while inflation remains somewhat elevated. Job gains have remained low, and the unemployment rate has been little changed in recent months.
The Federal Open Market Committee (FOMC) also highlighted elevated uncertainty around the economic outlook, particularly linked to developments in the Middle East, and reiterated that future policy decisions will depend on incoming data and the evolving balance of risks.
The Fed’s updated Summary of Economic Projections (SEP) showed a modest upgrade to the growth outlook compared with December, with Gross Domestic Product (GDP) now seen at 2.4% for 2026, up from 2.3%.
However, inflation forecasts were revised higher, with Personal Consumption Expenditure (PCE) inflation projected at 2.7%, up from 2.4% previously. The Unemployment Rate projection remained broadly unchanged at 4.4% for 2026.
The median dot plot maintained expectations for one rate cut in 2026 and another in 2027, with the federal funds rate projected at 3.4% and 3.1%, respectively.
Fed Chair Jerome Powell said in the post-meeting press conference, “Near-term inflation expectations have been up in recent weeks due to developments in the Middle East.” He added, “It is too soon to know the scope and duration of energy market effects on the economy,” while stressing, “If I don’t see inflation progress, you won’t see the rate cut.”
On the Swiss side, the State Secretariat for Economic Affairs (SECO) slightly revised its growth outlook downward, with the economy now expected to expand by 1.0% in 2026, down from the previous estimate of 1.1%, indicating below-average growth.
The downgrade comes as rising energy prices linked to Middle East tensions add to inflation pressures, with inflation now expected at 0.4% in 2026, up from 0.2% previously.
