"There are no inflation risks and deflation risks are kept in check by the exchange rate floor"
- Sarasin economist Alessandro Bee
The inflation rate in Switzerland fell unexpectedly in November due to the fall in fuel, rents and food costs, adding to signs that the Swiss National Bank will not remove its cap on the nation's currency. Swiss prices fell 0.4% from a year ago compared to a drop of 0.2% in the prior month, and were down 0.3% on a monthly basis. Analysts, however, had expected flat prices from a month ago. In order to avoid the deflation and any risks of recession, the SNB capped the Franc at 1.20 per euro in September 2011, as investors considered the currency as a safe haven.
"There are no inflation risks and deflation risks are kept in check by the exchange rate floor," said Sarasin economist Alessandro Bee. "We've seen less tension there over the last days: the franc is back on a level where intervention is not an issue. At 1.21 francs per euro, the SNB does not have sleepless nights."
In a separate report, the State Secretariat for Economic Affairs said that the overall unemployment rate in Switzerland edged higher in November, a sing the economy is hit by the prolonged debt crisis in the Eurozone. Swiss jobless rate rose to 3.1% in November, following a 2.9% reading in October, meeting analysts' expectations.
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