the end of the forecasting horizon. this would be above the range which the snb equates with price stability. the forecast shows that the current level of interest rates cannot be maintained once the economic situation normalises. since monetary policy has been expansionary for a long time now, there is a greater threat of inflation in the future. if the economic outlook continues to improve, it will be necessary to make adjustments to monetary policy. with our decision to leave the three - month libor unchanged, we are adhering to our previous monetary policy course for the time being. we continue to support the economy, using the leeway available to us. this policy should guarantee longer - term price stability. as mentioned before, the snb will respond appropriately if the swiss franc appreciates rapidly, and is keeping all its options open for this eventuality, as it has done in the past. observed inflation june 2005 inflation forecast on march 2005 with libor at 0. 75 % and of june 2005 with libor at 0. 75 % inflation forecast of june 2005 ( 53 kb )

jean - pierre roth : economic activity in switzerland introductory remarks by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the half - yearly media news conference, berne, 16 june 2005. * * * ladies and gentlemen as we have just announced in our press release, the swiss national bank is leaving the target range for the three - month libor rate unchanged at 0. 25 - 1. 25 %. it intends to keep the rate in the middle of the target range at around 0. 75 % for the time being. the fourth quarter of 2004 and the first quarter of 2005 saw a stagnation of economic activity in switzerland, with the high price of oil as well as the depreciation of the dollar in the final quarter of 2004 acting as brakes. these factors also held back economic activity in europe, as had been expected, thus further weakening the swiss economy. despite the sluggish development in the first quarter of 2005, the snb still expects the economy to recover during the course of the year, with an increase in momentum in the second half. this notwithstanding, the pace of expansion for 2005 is likely to slow further. the snb thus projects a growth rate of around 1 %, as compared with 1. 5 % at the last assessment. its expectations with regard to inflation in 2005 remain unchanged from the march assessment, so that average annual inflation for the year is likely to amount to 1 %. on the assumption that the three - month libor remains unchanged at 0. 75 %, annual inflation is forecast to stand at 0. 5 % in 2006 and reach 1. 4 % in 2007. inflation prospects for the medium term now look more positive than they did at the march assessment. a correction to the expansionary monetary policy pursued by the snb for a long time now will be necessary if the economic outlook improves. should the swiss franc appreciate rapidly, the swiss national bank will respond appropriately. what were the most important factors that led to our decision to leave the three - month libor rate unchanged? before answering this question, i would like to briefly outline the situation we are facing. i will begin by presenting the economic environment, and then go on to describe the monetary situation. as far as economic activity is concerned, we have revised our evaluation downwards since the last monetary policy assessment. in the final quarter of 2004, the swiss economy slipped slightly, accompanying a rise in the price of oil and a decline in the dollar