Monetary policy assessment at mid-year
Central bank: snb | Type: statement | Date: 2004-06-17

Communications
P.O. Box, CH-8022 Zurich
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Geneva, 17 June 2004
Press release
Monetary policy assessment at mid-year
points to 0.0%-1.0%. For the time being, it intends to keep the three-month Libor rate in the middle of the target range at
around 0.5%. After this step, the interest target range will again exhibit a spread of 100 basis points.
Economic activity in Switzerland is developing in line with the National Bank's expectations. For 2004, the National Bank
anticipates economic growth of close to 2%. Higher oil prices will temporarily trigger price increases. The inflation potential,
however, will remain modest within the short term. Since the economic recovery has strengthened and the threat of deflation
has disappeared, monetary policy will be tightened slightly. Notwithstanding this interest rate rise, the National Bank will
adhere to its expansionary monetary policy. It will continue to support the upswing and to keep the attractiveness of Swiss
franc investments low. Should the Swiss franc appreciate markedly due to unexpected events, the National Bank will react
appropriately.
According to the new inflation forecast, average annual inflation is likely to amount to 0.6% this year, to 1% in 2005 and to 2%
in 2006. The inflation forecast is based on the assumption that the three-month Libor rate will remain steady at 0.5%.