The USD/CHF currency pair extended gains on Thursday in the wake of the Swiss National Bank’s policy decision.

The Swiss National Bank left its policy rate without change at 0% at its September 25th meeting, in line with market consensus. This way, borrowing costs remained at their lowest level since August 2022.

Inflationary pressure has remained subdued, as inflation picked up to 0.2% in August from -0.1% in May, propelled mostly by tourism and imported goods.

The central bank now forecasts average inflation at 0.2% for 2025, at 0.5% for 2026 and at 0.7% for 2027.

In the meantime, market players awaited the US PCE inflation data for fresh clues on the Federal Reserve’s monetary policy trajectory.

Annual core PCE inflation probably remained steady at 2.9% in August, according to market consensus, while annual PCE inflation probably accelerated to 2.7% from 2.6% in July.

Federal Reserve Chair Jerome Powell said this week the US central bank had to continue balancing the competing risks of high inflation and a weakening job market in its future policy decisions.

The Fed lowered its federal funds rate target range by 25 basis points to 4.00%-4.25% at its September meeting.

Markets are now pricing in about a 92% chance of a 25 basis point Fed rate cut in October and a 25% chance of another 25 bps cut in December.

The USD/CHF currency pair was last up 0.21% on the day to trade at 0.7963.