The EUR/CHF currency pair registered a fresh 2 1/2-week high on Thursday, after the Swiss National Bank delivered a larger rate cut than expected in December and ahead of the outcome of the European Central Bank’s policy meeting later in the day.

The SNB slashed its key policy rate by 50 basis points to 0.5%, which has been a fourth straight reduction that brought borrowing costs to their lowest level since November 2022.

Market consensus had pointed to a smaller, 25 bp rate cut.

The policy decision came after annual CPI inflation in Switzerland eased to 0.7% in November from 1.1% in August due to lower costs of domestic services, food and oil.

The SNB projects that inflation will remain within its target range, while averaging 1.1% in 2024, 0.3% in 2025 and 0.8% in 2026.

Up next, the European Central Bank is largely expected to lower its main refinancing operations rate by 25 basis points to 3.15% at its December policy meeting. And, the ECB deposit facility rate is expected to be reduced to 3.00% from 3.25% currently.

Although inflation is expected to pick up in the short term, it should ease toward the 2% objective next year.

Annual consumer price inflation in the Euro Area rose to 2.3% in November from 2% in October, accelerating for a second straight month.

The acceleration was expected due to base effects, since the steep declines in energy prices from 2023 are no longer factored into the annual rate.

Core CPI inflation, on the other hand, remained steady at 2.7% in November.

ECB policy makers noted wage growth was still elevated, but yet, pressures were easing.

The EUR/CHF currency pair was last gaining 0.68% to trade at 0.9336. The minor Forex pair earlier rose as high as 0.9343, or its highest level since November 25th.