Both are intended to make Swiss franc investments less attractive, thereby easing pressure on the franc. This is important given that the franc remains significantly overvalued. Our expansionary monetary policy is aimed at stabilising price developments and supporting economic activity. Our new conditional inflation forecast suggests that inflation will rise faster over the coming quarters than we predicted in March, principally due to the significant increase in oil prices in the intervening period. The effect of this oil price rise on annual inflation vanishes after the first quarter of 2017. The new conditional forecast moves closer to that of the last quarter from then on, and is in line with it from 2018. This forecast shows that our expectations for the medium-term development of inflation and the Swiss economy remain essentially unchanged. At –0.4%, our inflation forecast for the current year is 0.4 percentage points higher than in March. For 2017, we expect inflation to be 0.3%, somewhat higher than assumed in the previous quarter. For 2018, we continue to anticipate inflation of 0.9%. 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 outlook Since the assessment of the inflation and economic outlook for Switzerland is heavily influenced by economic developments abroad, let me now present our assessment of the global economy. The moderate recovery in the global economy is continuing, supported by ongoing highly expansionary monetary policy worldwide.

BIS central bankers’ speeches  1  Economic recovery is particularly well advanced in the US where labour market developments in the first few months of the year were generally positive. The US is on the cusp of full employment for the first time since the onset of the financial crisis in 2008. Economic growth in the euro area is gradually becoming more broad-based, and this is increasingly spilling over into the labour market. The unemployment rate has again fallen slightly in recent months. In China, growth remains robust, thanks to various economic policy measures aimed at stimulating domestic demand. Overall, international growth is principally being driven by domestic demand and the services sector. By contrast, global manufacturing and trade remain subdued. The international financial markets were dominated by turbulence at the start of the year, however positive economic signals since then have helped to ease the situation. Risk premiums and volatility have fallen perceptibly in recent months. At the same time, commodity prices have also recovered from their multi-year lows. We expect the global economic recovery to sustain over the next few quarters. Nevertheless, significant risks remain. Global growth continues to be fragile due to deeply entrenched structural problems. Furthermore, uncertainty emanating from political events could escalate, hampering economic development. The imminent UK referendum on whether to stay in the European Union has already caused volatility on the financial markets to rise. Swiss economic outlook I shall now turn to the economic outlook for Switzerland.