Monetary policy assessment of 11 December 2014
Central bank: snb | Type: statement | Date: 2014-12-11

Monetary policy assessment of 11 December 2014
euro, and is leaving the target range for the three-month Libor unchanged at 0.0–0.25%.
Deflation risks have increased once again and the Swiss franc is still high. Consequently, the
SNB will continue to enforce the minimum exchange rate with the utmost determination. It is
prepared to buy foreign currency in unlimited quantities for this purpose. With the three-
month Libor at zero, the minimum exchange rate is the key instrument to avoid an undesirable
tightening of monetary conditions. If required, the SNB will take further measures
immediately.
The SNB has once again adjusted its conditional inflation forecast downwards compared to
the previous quarter. Above all, the appreciably lower oil price will push inflation into
negative territory during the next four quarters. Over the medium to long term, persistently
low inflation across the globe and the even weaker outlook for the euro area economy will
dampen inflation in Switzerland. For 2014, the SNB has revised its inflation forecast
downwards by 0.1 percentage points to 0.0%. For 2015, forecast inflation will even turn
negative, at –0.1%. Only in 2016 is inflation expected to rise slightly, to 0.3%. This
constitutes a downward adjustment of 0.3 percentage points for 2015, and 0.2 percentage
points for 2016. These forecasts assume that the three-month Libor will remain at zero over
the entire forecast horizon, and that the Swiss franc will weaken.
Global economic developments continue to be mixed. The US, UK and China all saw robust
growth in the third quarter. In the euro area and Japan, by contrast, it was weaker than
expected. The SNB is assuming that global economic growth will gradually firm over the
course of next year. The considerable fall in oil prices should be a contributory factor.
However, the prospects for individual countries vary widely. While the US is likely to see
favourable developments, the outlook for the euro area is very subdued.
Berne, 11 December 2014
Press release
Overall, the global economic outlook is still dominated by downside risks – the most
important of which are the continuing difficult conditions in the euro area and a possible
escalation in geopolitical tensions.
Following a weak second quarter, real GDP growth in Switzerland was unexpectedly
favourable in the third. On the demand side, the increase was driven predominantly by goods
exports. Momentum in equipment investment, by contrast, remained weak. In part, growth
was also boosted by special factors. Moreover, utilisation of economic capacity continued to
be unsatisfactory. It is likely that growth will once again be markedly lower in the fourth
quarter. As a result of the comprehensive revision of the national accounts, the reported
figures for previous quarters are higher, and therefore GDP growth for the current year should
also be somewhat higher than assumed in September, by 1.5–2%. However, the underlying
economic momentum has not changed. For next year, the SNB still expects to see GDP
growth of about 2%. Thus, the underutilisation of economic capacity should decline only
gradually.
In the third quarter, mortgage lending growth weakened further. At the same time, real estate
prices continued to rise. However, as in 2013, price momentum was weaker than in previous
years. The imbalances that have built up on these markets in recent years are still just as high
as before. The SNB is monitoring the situation on these markets closely, and regularly
assesses the need for an adjustment of the countercyclical capital buffer.
Berne, 11 December 2014
Press release