thomas jordan : swiss national bank ’ s monetary policy decision and assessment of the swiss 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, 1 december 2014. * * * ladies and gentlemen welcome to the swiss national bank ’ s six - monthly news conference. i will begin by explaining the governing board ’ s monetary policy decision and outlining our assessment of the economic situation. i will then hand over to my colleagues, jean - pierre danthine and fritz zurbrugg, who will comment on current developments in financial stability and the financial markets. thereafter, we will be happy to take your questions. monetary policy decision i will begin with our monetary policy decision. the swiss national bank ( snb ) has decided to maintain the minimum exchange rate of chf 1. 20 per euro. the target range for the three - month libor remains at 0. 0 – 0. 25 %. deflation risks have increased once again in recent months, and 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 at zero, the minimum exchange rate is the key instrument to avoid an undesirable tightening of monetary conditions. this is especially important at the moment, as upward pressure on the swiss franc has intensified once again. furthermore, we will not hesitate to take further measures, should they prove necessary. our new conditional inflation forecast has been revised downwards once again. above all, the appreciably lower oil price will push inflation into negative territory during the next four quarters. moreover, the economic outlook for the euro area has deteriorated once more. together with persistently low inflation across the globe, this is dampening the medium and long - term inflation outlook for switzerland. for the current year, we have revised our forecast downwards by 0. 1 percentage points to 0. 0 %. for 2015, we are now even anticipating a negative inflation rate of – 0. 1 %, with inflation turning positive only in 2016, at 0. 3 %. this constitutes a downward adjustment of 0. 3 percentage points for 2015, and 0. 2 percentage points for 2016. these forecasts assume that the three - month libor will remain at zero over the entire forecast horizon, and that the swiss franc will weaken.

demand and value added in manufacturing are likely to contribute significantly less to growth than in the previous quarter. as a result of the comprehensive revision of the national accounts, the reported figures for previous quarters are higher, and therefore gdp growth for the current year should also be somewhat higher than we assumed in september, by 1. 5 – 2 %. however, the underlying economic momentum has not changed. for next year we expect to see gdp growth of about 2 %. under this assumption, the underutilisation of economic capacity will decline only gradually. we are also expecting only a modest recovery on the labour market. monetary and financial conditions i will now turn to monetary and financial conditions. after a long period in negative territory, inflation has been hovering around zero for over a year. the minimum exchange rate has prevented deflationary developments, but inflation still lies towards the bottom of the range that we equate with price stability. moreover, according to the available surveys, medium - term inflation expectations have fallen steadily in recent years. yet, at around 1 %, they are still close to the long - term average inflation rate. interest rates, too, have remained very low across all maturities in the past few quarters. mortgage rates have declined further, reaching a new low in october. government bond rates have also fallen to new lows. my colleague, fritz zurbrugg, will discuss developments on the financial markets in more detail. despite falling mortgage rates, mortgage lending growth slowed again. at the same time, real estate prices continued to rise. however, as in 2013, price momentum is weaker than in previous years. this suggests that the measures to contain developments on the mortgage and real estate markets are starting to have an impact. yet the imbalances that have built up on these markets in recent years remain the same. it is still too early for an all - clear. the snb will continue to monitor the situation closely. my colleague jean - pierre danthine will discuss this topic in more detail in his presentation. bis central bankers ’ speeches since the last monetary policy assessment, the swiss franc has moved closer to the minimum exchange rate, and has thus strengthened against the euro once again. at the same time, both it and the euro have depreciated against the us dollar. overall, the exportweighted real external value of the swiss franc is virtually unchanged compared to last year, and thus continues to lie considerably above its long - term average. the swiss