Monetary policy assessment of 10 December 2015
Central bank: snb | Type: statement | Date: 2015-12-10

Monetary policy assessment of 10 December 2015
Monetary policy remains expansionary
range for the three-month Libor remains at between –1.25% and –0.25%, and the interest rate
on sight deposits with the SNB is unchanged at –0.75%. Despite depreciating somewhat in
recent months, the Swiss franc is still significantly overvalued. The negative interest rate and
the interest rate differential with other currencies make the Swiss franc less attractive, and
continue to help weaken it. At the same time, the SNB will remain active in the foreign
exchange market in order to influence the exchange rate situation, as necessary. The negative
interest rate and the SNB’s willingness to intervene in the foreign exchange market are
intended to ease pressure on the Swiss franc. The SNB’s monetary policy thus helps to
stabilise price developments and support economic activity.
Overall, the new conditional inflation forecast differs little from that of September. It
indicates slightly higher inflation in the short term, and that inflation had already bottomed
out in the third quarter. Owing to a slight deterioration in the outlook for the global economy,
medium-term inflation is somewhat lower than predicted in September. For the current year,
inflation is forecast at –1.1%, a 0.1 percentage point rise on last quarter. For 2016, an inflation
rate of –0.5% is expected, and for 2017, the forecast is now at 0.3% instead of 0.4%. The
conditional inflation forecast is based on the assumption that the three-month Libor will
remain at –0.75% over the entire forecast horizon.
Global economic growth in the third quarter was below expectations, mainly due to weaker
manufacturing activity around the globe and sluggish world trade. In contrast to
manufacturing, the services sector performed well in most countries due to robust domestic
The SNB has revised its growth forecast for the global economy slightly downwards for the
short term. Overall, its assessment of global economic prospects is cautiously optimistic.
Nevertheless, there are significant risks. The structural change underway in China could
Berne, 10 December 2015
Press release
continue to hold back global manufacturing and investment activity. Equally, structural
weaknesses in Europe as well as current concerns about public safety could also weigh on
economic developments.
The slower pace of global economic growth was also felt in Switzerland, with the first official
GDP estimate indicating stagnation in the third quarter. Economic performance thus came in
below expectations. A close examination of a broad range of indicators leads to a somewhat
more positive assessment of the economy. Nevertheless, capacity utilisation remains
unsatisfactory, and demand for labour muted.
For 2015, the SNB still anticipates real growth of just under 1% in Switzerland. The gradual
improvement of the global economy is likely to further strengthen foreign demand for Swiss
goods and services. Domestic demand also looks set to remain robust. For 2016, the SNB
expects growth of approximately 1.5%.
The past few months have seen mortgage volumes and prices for owner-occupied residential
real estate grow roughly in line with fundamentals. Imbalances on these markets have
therefore remained largely unchanged. The SNB will continue to monitor developments on
the mortgage and real estate markets closely. Accordingly, it will regularly reassess the need
for an adjustment of the countercyclical capital buffer.
conditional inflation forecast of december 2015
Year-on-year change in Swiss consumer price index in percent
2012 2013 2014 2015 2016 2017 2018
Inflation Forecast December 2015,
with Libor at -0.75%
Forecast September 2015,
with Libor at -0.75%
Berne, 10 December 2015
Press release