Thomas Jordan: Swiss National Bank’s monetary policy decision and assessment of the Swiss economic situation Introductory remarks by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 1 December 2014. *  *  *  Ladies and gentlemen Welcome to the Swiss National Bank’s six-monthly news conference. I will begin by explaining the Governing Board’s monetary policy decision and outlining our assessment of the economic situation. I will then hand over to my colleagues, Jean-Pierre Danthine and Fritz Zurbrügg, who will comment on current developments in financial stability and the financial markets. Thereafter, we will be happy to take your questions. Monetary policy decision I will begin with our monetary policy decision. The Swiss National Bank (SNB) has decided to maintain the minimum exchange rate of CHF 1.20 per euro. The target range for the three-month Libor remains at 0.0–0.25%. Deflation risks have increased once again in recent months, and the Swiss franc is still high. We will therefore continue to enforce the minimum exchange rate with the utmost determination. If necessary, we are prepared to buy foreign currency in unlimited quantities for this purpose. With interest rates at zero, the minimum exchange rate is the key instrument to avoid an undesirable tightening of monetary conditions. This is especially important at the moment, as upward pressure on the Swiss franc has intensified once again. Furthermore, we will not hesitate to take further measures, should they prove necessary.

However, private and public consumption also picked up, after having registered only lacklustre growth in the first half of the year. Momentum in equipment investment, by contrast, remained weak. In part, growth was also boosted by special factors, including an unusually large increase in value added in the healthcare industry. Despite the positive developments of the third quarter, utilisation of economic capacity remains unsatisfactory. We are assuming that growth will be markedly lower in the fourth quarter. In particular, export demand and value added in manufacturing are likely to contribute significantly less to growth than in the previous 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 we assumed in September, by 1.5– 2%. However, the underlying economic momentum has not changed. For next year we expect to see GDP growth of about 2%. Under this assumption, the underutilisation of economic capacity will decline only gradually. We are also expecting only a modest recovery on the labour market. Monetary and financial conditions I will now turn to monetary and financial conditions. After a long period in negative territory, inflation has been hovering around zero for over a year. The minimum exchange rate has prevented deflationary developments, but inflation still lies towards the bottom of the range that we equate with price stability. Moreover, according to the available surveys, medium-term inflation expectations have fallen steadily in recent years.