(Reuters) – The dollar hit a 6-1/2 month high on Thursday after the U.S. Federal Reserve signalled policy would remain restrictive for longer, even after holding rates steady, while the Swiss franc dropped after the Swiss National Bank kept rates unchanged.

The pound sank to its lowest since April before the Bank of England announces policy later in the day, the yen was at its lowest since November before Friday’s Bank of Japan policy announcement, while central banks in Sweden and Norway both met expectations for 25 basis point rate rises.

The dollar index, which measures the currency against a basket of rivals, rose as high as 105.68, its strongest since early March, before settling slightly lower at 105.45.

The Fed met market expectations at its monetary policy meeting on Wednesday, holding interest rates steady at the 5.25%-5.50% range.

The U.S. central bank, however, stiffened a hawkish monetary policy stance that its officials increasingly believe can succeed in lowering inflation without wrecking the economy or leading to large job losses.

Along with another possible rate hike this year, the Fed’s updated projections show significantly tighter rates through 2024 than previously expected.

“They were more hawkish further out on the curve with the dot plots signalling just 50 basis points of cuts in 2024,” said Niels Christensen, chief analyst at Nordea.

“The dollar should be well supported toward the end of the year or until we start seeing softer data.”

SNB SPRINGS SURPRISE

In Europe, the Swiss franc tumbled after the Swiss National Bank unexpectedly held rates steady, marking the first time the central bank has not hiked since March 2022, although it kept options open for further rate rises.

The euro rose 0.7% to 0.9643 francs, set for its biggest one-day rise since March’s banking turmoil. The dollar rose 0.8% to 0.9053 francs, hitting its highest level since June 13.

Meanwhile, Sweden’s Riksbank and Norway’s central bank both raised rates by 25 basis points, in line with expectations.

The euro was down 0.2% against the Swedish crown and 0.1% against the Norwegian crown following the respective decisions.

Elsewhere, sterling was last trading at $1.2316, just above a fresh four-month low against the greenback ahead of the Bank of England’s rate decision later in the day.

Data released on Wednesday showed that Britain’s high inflation rate unexpectedly slowed in August, raising questions about how much higher the central bank will take interest rates.

Market participants had leaned heavily toward the BOE hiking rates again on Thursday for what would be the 15th time, but expectations quickly shifted following the data.

The euro stood at $1.0658 after falling to a six-month low of $1.0617.

The Japanese yen was feeling the heat after the Fed meeting, hovering around 148.255 per dollar after touching a nearly ten-month low of 148.465 earlier on Thursday.

Even as the yen has slipped back toward levels seen at the end of last year, the possibility of the Bank of Japan tightening policy at Friday’s meeting remains slim.

“It seems unlikely the BOJ will announce any change of policy tomorrow, or soon for that matter. Although you never know for sure with this central bank,” said Matt Simpson, senior market analyst at City Index.

While Japan’s Chief Cabinet Secretary Hirokazu Matsuno issued more warnings on Thursday that authorities would not rule out any options in addressing excess volatility in currency markets, Simpson said the risk could be limited to verbal intervention.

“They may not actually intervene if the trend remains orderly,” Simpson said

Both the Australian and New Zealand dollars took a hit following the Fed’s meeting, with the Aussie last down 0.5% and the Kiwi falling over 0.1%.

The Kiwi, however, got some support after data out on Thursday showed New Zealand’s economy grew more than expected in the second quarter.