thomas jordan : swiss national bank ’ s assessment of the 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, 19 june 2014. * * * ladies and gentlemen welcome to the swiss national bank ’ s six - monthly news conference. as usual, i will begin by explaining the monetary policy decision and outlining our assessment of the economic situation. afterwards, jean - pierre danthine will present our latest financial stability report, before fritz zurbrugg comments on current developments in the financial markets. following our introductory remarks, we will be pleased to answer any questions you might have. monetary policy decision i will begin with the monetary policy decision. the snb is maintaining its minimum exchange rate of chf 1. 20 per euro. the target range for the three - month libor will remain unchanged at 0. 0 – 0. 25 %. 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 close to zero, the minimum exchange rate is the right tool to avoid an undesirable tightening of monetary conditions. this applies especially if the upward pressure on the swiss franc were to intensify once again. and, if required, we are also willing to take further measures. our new conditional inflation forecast shows that inflationary pressure has receded once more in the medium term. the inflation forecast for the coming quarters is slightly higher than in march. this is because the departure point for the forecast has moved upwards, as inflation was somewhat higher in may than expected. however, from mid - 2015 onwards, inflation will be lower than forecast in the previous quarter. the reason for this is that the global economic outlook has deteriorated slightly. another factor is the unexpectedly weak inflation in the euro area. at 0. 1 %, the inflation forecast for the current year is 0. 1 percentage points higher than in march. for 2015 and 2016, the new forecast – of 0. 3 % for 2015 and 0. 9 % for 2016 – is 0. 1 percentage points lower, in each case, than at the previous monetary policy assessment. it is important to bear in mind that our forecast is conditional. it is based on the assumption that the three - month libor remains at 0. 0 % over the next three years

and the swiss franc weakens over the forecast horizon. in our forecast, therefore, we assume that the snb will pursue a very expansionary monetary policy. even under such assumptions, there are still no signs of any inflation risks for switzerland in the foreseeable future. global economic outlook the snb ’ s inflation forecast is embedded in a global economic scenario. i would therefore now like to give you our assessment of the global economy. the global recovery remains hesitant overall. last quarter registered weaker growth than we had anticipated at our march monetary policy assessment. world trade also declined, after having exhibited strong growth in the last few months of 2013, which had raised hopes of a sustained economic recovery. bis central bankers ’ speeches in the us, gdp declined in the first quarter. however, we consider this to be a transitory phenomenon which can be largely put down to an exceptional cold snap experienced this winter. growth in the euro area was weak and varied greatly from one country to another. while economic activity continued to pick up in germany, renewed stagnation in france and italy gave rise to disappointment. we continue to expect the global economy to firm in the coming quarters. however, the global economic recovery will remain very subdued by historical standards. compared to the last monetary policy assessment, we now anticipate somewhat slower growth, in both advanced and emerging economies. it is entirely possible, however, that global economic growth will be weaker than we have assumed. the euro area continues to face significant challenges. these include the consolidation of public sector finances as well as the implementation of institutional reforms and reforms to promote growth. in addition, various emerging economies are suffering from structural problems. should the current geopolitical conflicts worsen, this would also hold back activity in the international economy. since the major currency areas are in different phases of the monetary policy cycle, there is also a danger of greater volatility in the financial and foreign exchange markets. all this generates a high level of uncertainty with regard to future developments in the global economy. swiss economic outlook i will now look at economic developments in switzerland. as expected, growth in switzerland picked up somewhat in the first quarter, after having been relatively weak in the previous quarter. the rebound was mainly attributable to the upturn in business activity in manufacturing and the banking sector. on the demand side, exports of goods – which had still been declining in the previous quarter – and construction investment were the main growth drivers. nevertheless, the capacity of the