The annualized pace of contraction in Switzerland’s Producer and Import Prices is expected to have slowed to -5.5% in August from the record-low -6.1% set in July. The outcome follows a similar moderation in consumer prices during the same period and foreshadows slightly better results for the headline inflation gauge in the months ahead. However, as we detailed in our weekly Swiss Franc forecast, it is much too early to say that the specter of deflation has dissipated, so the Swiss National Bank is unlikely to abandon their commitment to direct intervention into the currency markets to keep down the value of the Franc when monetary policy is announced later this week.
