In addition, the strong Swiss franc continues to weigh on some industries. Momentum in the labour market reflects this mixed picture. Although the situation continues to improve, the pace is only moderate. Seasonally adjusted unemployment has again receded slightly in the past three months. Companies are nevertheless still cautious about taking on new staff. For 2017, we continue to expect growth of roughly 1.5%. Exchange rates, interest rates and inflation expectations  I will now review changes to monetary conditions since the beginning of the year. The trade-weighted nominal exchange rate for the Swiss franc has remained stable overall in the last six months. In the run-up to the French presidential election, there were episodes of increased upward pressure. After the decision in France, the franc again weakened somewhat against the euro. By contrast, it appreciated slightly against the dollar. In real terms, the franc has virtually remained unchanged on a trade-weighted basis over the last half-year and is still significantly overvalued. Interest rates in Switzerland have remained virtually unchanged in recent months. The interest rate differential to the euro area has remained stable as well. Short-term rates in the US, on the other hand, have risen slightly, reflecting the tightening of monetary policy there. Inflation expectations for Switzerland have increased somewhat over the past half-year. Households, companies and financial analysts are now expecting an inflation rate of just above zero, also for the short term. In the longer term, meanwhile, expectations are around 1%.

A similar view is substantiated in the company talks conducted by the SNB’s delegates for regional economic relations. Inflation expectations are in the range that is consistent with the SNB’s definition of price stability. Monetary policy outlook  Ladies and gentlemen, let me summarise my key points. Inflation remains very low and capacity utilisation continues to be unsatisfactory. The Swiss franc is significantly overvalued. In periods of uncertainty, it is still subject to increased upward pressure. The two elements of our monetary policy ease this pressure. The negative interest rate makes Swiss franc investments less attractive, by at least partially restoring the traditional interest rate differential against other countries. Interventions in the foreign exchange market supply the market with additional Swiss francs when demand for our currency is particularly strong. Page 3/4  Berne, 15 June 2017 Thomas Jordan  News conference  Our expansionary monetary policy remains necessary in order to ensure price stability, while taking due account of economic developments. Newly designed ‘Business cycle signals’ report  To conclude, I would like to draw your attention to an additional document in the media pack. It is the preprint of the ‘Business cycle signals’ report. The SNB’s delegates for regional economic relations regularly conduct talks with managers of companies throughout Switzerland. These talks provide us with a first-hand account of the latest cyclical and structural developments in our economy and are an extremely valuable source of information for the Governing Board in its assessment of the economic situation.