Switzerland and Norway raise rates, US producer prices rise sharply

The global tightening cycle continued yesterday with interest rate hikes by Switzerland:

The Swiss National Bank (SNB) is raising the target range for the three-month Libor with immediate effect by 0.25 percentage points to 1.75–2.75%. The SNB intends to hold the rate in the middle of the target range for the time being.

...and Norway.

Norges Bank’s Executive Board decided today to raise its key policy rate by 0.25 percentage point to 4.00 per cent with effect from 16 March 2007.

No interest rate hike is likely in the US in the near future, but inflation fears returned somewhat yesterday. Reuters reports:

The Labor Department said the Producer Price Index, a gauge of prices received by farms, factories and refineries, rose 1.3 percent last month as energy costs climbed 3.5 percent and food prices moved up 1.9 percent.

Excluding volatile food and energy costs, the so-called core index advanced 0.4 percent, reflecting steep increases in tobacco and light truck prices...

First-time claims fell by a larger than expected 12,000 to 318,000 last week. A more reliable four-week moving average of initial claims dropped by 10,250 to 329,250.

But there were also more signs of an economic slowdown.

The Philadelphia Federal Reserve Bank said its business activity index, which covers the mid-Atlantic region, dipped to 0.2 percent from 0.6 in February. Separately, the New York Fed said its gauge of New York state factory activity fell to its lowest since May 2005.

Meanwhile, in the euro zone, industrial production was down by 0.2 in January compared to December, but annual inflation was stable at 1.8 percent in February.