ZURICH, March 6 (Reuters) - Swiss inflation increased at a higher than expected rate in February, data showed on Monday, raising chances that the Swiss National Bank will raise interest rates this month.
Consumer prices increased last month by 3.4% year on year, up from 3.3% in January and well above the SNB target range for price stability, defined as between 0-2%.
The central bank is due to announce its policy decision on March 23, with the market seeing a 91% probability of a 50 basis point increase from the current level of 1%, especially following recent weakening of the Swiss franc, which has helped limit price rises from costlier imports.
The SNB declined to comment on Monday on the data.
The inflation rate was more than economists had expected, with Credit Suisse anticipating 2.9%, and UBS and J.Safra Sarasin 3.0%.
Prices rose 0.7% month-on-month due to rising rents and more expensive petrol.
Core inflation, which strips out volatile items like fuel and food, was 0.8% from January and 2.4% from February 2022.
"I think a 50 basis point rates increase in March is nailed on especially after this reading," said Karsten Junius, an economist at J.Safra Sarasin.
"We currently expect the SNB to raise rates 25 basis points in June, but if inflation remains high, we cannot rule out a 50bp increase."
Credit Suisse economist Maxime Botteron said the SNB would not just look at the February data when deciding its next move, but rate increases were likely.
On Monday the economist raised his forecast for the SNB's policy rate, saying he now expected the central bank to increase to 1.75% in March, up from his previous forecast for 1.5%.
For June he expects a 50 basis point rise to 2.25%, up from his previous forecast for an increase to 1.75%.
"Depending on the progress of the disinflationary process over the summer, we would not rule out additional rate hikes in the second half of the year," Botteron said.
