Monetary policy assessment of 15 June 2017
Central bank: snb | Type: statement | Date: 2017-06-15

Monetary policy assessment of 15 June 2017
aim of stabilising price developments and supporting economic activity. Interest on sight
deposits at the SNB is to remain at –0.75% and the target range for the three-month Libor is
unchanged at between –1.25% and –0.25%. The SNB will remain active in the foreign
exchange market as necessary, while taking the overall currency situation into consideration.
The negative interest rate and the SNB’s willingness to intervene in the foreign exchange
market are intended to make Swiss franc investments less attractive, thereby easing pressure
on the currency. The Swiss franc is still significantly overvalued.
The new conditional inflation forecast differs little from that of March. The SNB continues to
anticipate an inflation rate of 0.3% for the current year. For 2018, the forecast has fallen
slightly to 0.3%, from 0.4% in the previous quarter. For 2019, it now expects inflation of
1.0%, compared to 1.1% last quarter. The conditional inflation forecast is based on the
assumption that the three-month Libor remains at –0.75% over the entire forecast horizon.
In line with the SNB’s expectations, the global economy has strengthened further. Owing to
the economic growth, the labour market situation in advanced economies has improved in
recent quarters. Despite positive developments in the real economy, inflation remains modest
in most advanced economies. Against this background, monetary policy in Japan and the euro
area, in particular, is likely to remain very expansionary. In the US, monetary conditions are
expected to gradually normalise.
In its new baseline scenario for the global economy, the SNB anticipates that economic
developments will remain favourable. The cautiously optimistic baseline scenario continues to
be subject to considerable downside risks; this is due to political uncertainty and structural
problems in a number of advanced economies.
Berne, 15 June 2017
Press release
According to initial quarterly estimates of the national accounts, positive stimuli from abroad
were again only partially transmitted to the Swiss economy in the first quarter of 2017.
Although GDP growth firmed somewhat, it still remained subdued at an annualised 1.1%,
having already been weak in the second half of 2016. However, available economic indicators
point to slightly more robust economic momentum. For 2017, the SNB continues to expect
growth of roughly 1.5%.
In the first quarter, growth in mortgage lending remained constant at a relatively low level,
and momentum in residential real estate prices continued at a measured pace. At the same
time, owing to developments in fundamentals and the generally subdued activity on the
mortgage and residential real estate markets, imbalances have fallen slightly in recent
quarters. Nevertheless, they are still just as pronounced as they were in 2014, when the
sectoral countercyclical capital buffer was set at 2%. The SNB will continue to monitor
developments on these markets closely, and will regularly reassess the need for an adjustment
of the countercyclical capital buffer.
Berne, 15 June 2017
Press release