Swiss Inflation Surge in November

Switzerland's inflation rate rose to 1.8 percent in November, the highest level in more than six years, as oil near $100 a barrel drove up costs for heating and energy.

``Looking at the headlines of higher growth and higher inflation would suggest that the SNB should raise interest rates,'' said Jan Amrit Poser, chief economist at Bank Sarasin in Zurich. ``But that disregards the turmoil in the credit markets and the fact that inflation is completely oil-driven and can't be damped by interest rate hikes.''

The Swiss National Bank raised its target rate in September to combat price pressures. Since then, the SNB has adopted a ``wait-and-see mode'' to assess the impact of the U.S. mortgage crisis on the Swiss economy and other risks to growth, President Jean-Pierre Roth said on Oct. 9. The bank's next policy decision is on Dec. 13.

Investors are not pricing in a rate increase in December and forecast a cut by June 2008, futures trading shows. The implied rate on the three-month Liffe contract expiring in December is 2.76 percent, while for June 2008 it's 2.58 percent.

Swiss Inflation Surge in November, Bloomberg
12/4/2007 6:10:35 AM