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Inflation picks up more than forecast

Swiss consumer price inflation picked up slightly more than expected in December, reducing the likelihood of renewed currency interventions by the central bank.

Year-on-year, the inflation rate rose 0.5 per cent, compared with December 2009, and was unchanged from November, the Federal Statistics Office said on Thursday. The average inflation rate for 2010 was 0.7 per cent.

Core inflation, which strips out volatile price components such as food and fuel, rose a notch to 0.1 per cent.

Switzerland emerged from recession in the third quarter of 2009, and recent indicators have pointed towards further recovery.

Thomas Jordan, a vice-president of the Swiss National Bank (SNB), said earlier this week that it was still too early to raise interest rates, though prolonging loose policy was not without dangers.

Most economists expect a small interest rate increase in the second half of 2011. In March, the SNB cut its three-month Libor (London Interbank Offered Rate) target to 0.25 per cent and intervened in currency markets to fight the worst recession in decades.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR