become available for profit distribution in favour of the confederation and the cantons. as from 2003, annual profit distribution will amount to sfr 2. 5 billion. the profit distribution agreement concluded with the confederation last april need not be revised. it already provides for an automatic revision of the situation in the event that the national bank's earnings should permanently exceed the expected level. inflation forecast december 2002 with libor at 0. 75 % annual average inflation in % 0. 7 0. 7 0. 9 1. 6

the main elements : definition of price stability, inflation forecast as main indicator and target range for the three - month libor rate as operational target. overall, our experience with our monetary policy concept has been good. recently, this experience was discussed at an internal conference. since the new concept was adopted, we have widened the basis of our monetary policy decisions and further developed our analysis of indicators and models. the more extensive use of relevant information enabled us to react more swiftly and with more foresight than formerly to changes in the economic situation. our monetary policy concept met with a positive public reception in switzerland. the same applies to the financial markets and international organisations such as the imf and the oecd. the concept has vastly improved transparency. by publishing studies on internal decision - making processes and the forecasting models used, we have made further relevant information accessible. the public is thus in a better position to understand the reasoning behind monetary policy decisions. so far, we have published our inflation forecasts regularly in june and december. we should like to take this a step further and will in future publish an updated inflation forecast after every quarterly assessment of the situation. this will further help to improve transparency. from 2003 onwards, we will also inform the public of our monetary policy by publishing new inflation forecasts in march and september. as in the past, we shall present our june and december inflation forecasts at our media conferences. in march and september, the inflation forecast will be published within the context of the press release on the quarterly assessment of the situation. gold sales on 22 september this year, the swiss people and the cantons rejected both the gold initiative and the counter - proposal. the national bank, however, continues to implement its programme for the sale of half of its gold reserves. for the time being, the surplus gold reserves will still figure in our balance sheet. to date, approximately 660 tonnes of a total of 1, 300 tonnes of gold have been sold. we see no reason to change our strategy : these assets are surplus reserves which are no longer needed for monetary policy and which may be put to another use. in order to use the reserves for other purposes, the gold is sold and the proceeds are invested in securities. we invest the proceeds from the gold sales in swiss and foreign securities. the portfolio from the surplus reserves is thus less exposed to exchange rate fluctuations than the foreign exchange reserves. the earnings deriving from invested gold proceeds flow into the snb's income statement and thus