The Swiss franc and the Norwegian krone fell against the euro after the central banks of the two countries raised interest rates by 25 basis points as expected, though analysts said a weak inflation outlook leaves less scope for further hikes in both cases. At 1.58 pm, the Swiss franc was trading at 1.5679 to the euro, compared with 1.5649 sfr just before the rate announcement, and the Norwegian krone was trading at 7.9926 per euro compared with 7.9648 nkr previously. The Swiss National Bank raised its three-month Libor rate range by 0.25 percentage points to 0.75-1.75 pct, while Norges Bank hiked its sight deposit rate to 2.50 pct from 2.25 pct. CALYON analyst Henrik Gullberg said the decisions had been fully expected by the markets, but if anything, risks were "slightly to the upside" with a 50 basis point hike at least a possibility. However, a weak inflation outlook in both countries could dampen the outlook for interest rates, Gullberg said. "The dilemma for both banks is that while the real economy is progressing well, spot inflation continues to come in below projections, leading to repeated downward revisions to inflation along the curve and thus also making it difficult for both banks to justify higher rates," he said. Both central banks were fairly downbeat on the outlook for inflation. The SNB said Swiss inflation is forecast to reach 1 pct, largely due to developments in the oil price, but should remain moderate and subside somewhat in 2006. The Norwegian Central Bank, meanwhile, said there is a risk that "persistently low inflation" could mean interest rates rise more slowly than predicted in the latest Inflation Report. It noted "unexpectedly low" inflation in December and January, although February had shown some signs of a pick-up, it said.