path for the swiss economy. the output gap – i. e. the gap between normal and actual utilisation of resources – will diminish. monetary development alongside the figures for the real economy, movements in monetary and credit aggregates also indicate that economic recovery is underway. since adopting a resolutely expansionary monetary policy three years ago, mortgage lending has grown at an annual rate of over 5 %. we continue to monitor developments in the real estate market closely. since september, other loans have also recorded positive rates of growth with respect to year - back figures. in the past, a development of this kind usually indicated a strengthening in economic recovery. the economy is well supplied with liquidity as a result of the expansionary monetary policy. although the growth of the broadly - defined monetary aggregate, m3, had fallen to 1 % in october 2004, it has since climbed back to over 6 %. however, excess liquidity will be gradually reduced as a result of the interest rate increase announced today. in this way, we aim to ensure that price stability is not endangered in future. the monetary policy decision the economic and monetary situation has developed in the way we anticipated. the inflation outlook prior to today ’ s decision was largely in line with the figures presented at the last monetary policy assessment. for 2006, however, we forecast a slightly higher level of inflation to that presented in the last assessment. this is due to revisions made to certain figures that point to a higher rate of utilisation in the economy. in view of this inflation outlook, what is the justification for our decision to increase the target range for three - month libor by 25 basis points? while we anticipate falling rates of inflation next year, this decline is not relevant in terms of monetary policy. recent inflation levels of over 1 % are probably largely due to the rise in oil prices which began in the first half of 2004. at the time, we decided not to take this increased inflation into account in our monetary policy decisions, due to the fact that its consequences could not be neutralised through monetary policy measures. it seems logical, therefore, not to take account of a decline in inflation attributable to subsiding oil prices, particularly since this drop also results from a statistical effect. a number of inflation components are likely to persist at a low level, even in 2006. we are working on the assumption that the prices of imported products will continue to fall, due especially to the continued pressure ex

, it was up by 2. 3 %. together with the gdp figures for the third quarter, seco also presented revised figures for the first two quarters. the new figures are substantially higher than before, even after the considerable increase in the figure for the first quarter that was presented in september. most observers were surprised by the size of the growth estimate for the third quarter. what is more, the retrospective revisions have considerably modified the perception of the economic situation in the first half of the year. nevertheless, interpretation of the quarterly estimates is difficult in view of the sizable fluctuations in final demand and the fact that the main factor impacting on gdp momentum are changes in inventories. other indicators, such as the consumer confidence index, company expectations, labour demand and the continued low level of inflation expectations, appear to indicate a more modest level of economic momentum. despite the uncertainty with respect to the gdp estimates, the information currently available to us indicates that economic recovery has accelerated over the past few months. fourth - quarter indicators point to a continuation in the economic upswing. although export growth is slowing, international demand remains robust. this momentum is increasingly shifting into the domestic sector, where it is acting as a stimulus. gradually, the utilisation of industrial production capacities is improving. meanwhile, companies expect demand to pick up over the next few months. there were signs of a recovery in corporate investment in the third quarter. over the next few quarters, a high utilisation rate of technical capacity in industry and a more favourable sales outlook are likely to provide greater support for investments in equipment and a gradual increase in labour demand. as a result, the disequilibrium in the labour market is likely to diminish. in the last quarter, private consumption remained strong. since employment can be expected to increase over the course of 2006, consumer confidence should strengthen. by contrast, the stimulus provided by construction investment is likely to subside next year. in particular, we may expect that, after three years of robust growth, investments in residential construction will stagnate at a high level. overall, we project gdp growth of just over 1. 5 % this year. previously, we had expected growth to reach about 1 %. to a large extent, this correction to our growth forecast is due to seco ’ s revision of the figures for the first two quarters. for 2006, we forecast economic growth of a little more than 2 %. this would take gdp growth to a level above the potential growth