• The Swiss Franc trades little changed ahead of the Swiss National Bank meeting on Thursday. 
• Markets are pricing in a 29% probability of the SNB cutting interest rates. 
• The technical picture shows a box range forming on the 4-hour chart. 

The Swiss Franc (CHF) edges slightly higher at the start of the week, up a few hundredths of a percent in its most heavily traded pairs. 

Swiss Franc traders are awaiting the big event of the week, the Swiss National Bank (SNB) March policy meeting on Thursday. 

The probability of the SNB trimming its 1.75% policy at the meeting lies at 29%, according to Reuters. If it were to cut rates the Swiss Franc would weaken, as lower interest rates attract less foreign capital inflows. 

Swiss Franc vulnerable due to lower inflation 

The latest inflation data from Switzerland showed a fall in the Consumer Price Index (CPI) in February to 1.2% YoY from 1.3% in the previous month, according to the Federal Statistical Office.  

Overall this is lower than the SNB expected back at its December meeting, when it said  inflation, which was then at 1.4%, was likely to “increase somewhat in the coming months due to higher electricity prices and rents, as well as the rise in VAT.”

The SNB estimates inflation to average 1.9% in 2024. However, the rate of inflation is currently considerably below that figure at 1.2%  – though on a monthly basis the CPI did rise 0.6% in February from 0.2% previously. 

Inflation is also well below the SNB’s first-quarter forecast of 1.8%. 

"Consumer price inflation is running 0.6 ppts below the bank's 1.8% first-quarter forecast, while core inflation of 1.1% is the lowest since January 2022," Reuters reports. 

The Zurich-based institution will also publish a new set of medium-term inflation forecasts on Thursday, which could impact the outlook for monetary policy and CHF. If it revises down its inflation forecasts substantially, it would be negative for the Swissie, since it would suggest a higher probability of the SNB cutting interest rates on the horizon. 

Often the SNB mimics the European Central Bank (ECB). However, inflation is falling faster in Switzerland than in the Eurozone, indicating a possibility it could move to cut rates before its European cousin