More action from SNB?

It seems that Swiss central bank has lost some grip as Alpine economy is sending alarming signals. During the last couple years we have seen little action from the SNB, as pressure on the Franc eased and the economy was developing steadily. While the EUR/CHF currency pair is fluctuating more than 300 pips above the threshold level of 1.20, Swiss officials posted a bunch of disappointing data. 

Earlier this month the Office for National Statistics said consumer prices declined 0.2% in December, after staying flat in November. On a yearly basis prices steadied at 0.1%, yet missing estimates of a 0.2% gain. This leads the average annualised inflation last year to 0.2%. On Friday the same agency reported that another measure of consumer inflation sank in December, with producer and import prices falling 0.4% from the same month a year earlier. Prices were flat on a monthly basis and remained unchanged during the whole 2013. Nevertheless, this is a step forward, compared with 2012 and 2011 declines, when PPI dropped 1% and 0.9% respectively. The inflation data contrasts with other reports, such as KOF leading indicator, which predicts the economy will build up steam in the first half of 2014. The cap imposed by the SNB in September 2011 helped the economy to avoid slipping into recession; however, the latest data suggests Switzerland is facing a weak inflationary pressure once again.