news conference berne, 15 june 2017 thomas jordan introductory remarks by thomas jordan ladies and gentlemen it is a pleasure for me to welcome you to the swiss national bank ’ s news conference. i will begin by explaining our monetary policy decision and our assessment of the economic situation. i will then hand over to fritz zurbrugg, who will present this year ’ s financial stability report. after that, andrea maechler will review developments on the financial markets. finally, we will – as ever – be pleased to take your questions. monetary policy decision let me begin with our monetary policy decision and the inflation forecast. we are maintaining our expansionary monetary policy, with the aim of stabilising price developments and supporting economic activity. interest on sight deposits at the snb is to remain at – 0. 75 % and the target range for the three - month libor is unchanged at between – 1. 25 % and – 0. 25 %. we will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. the negative interest rate and our willingness to intervene in the foreign exchange market are intended to make swiss franc investments less attractive, thereby easing pressure on the currency. the swiss franc is still significantly overvalued. the new conditional inflation forecast differs little from that of march. we continue to anticipate an inflation rate of 0. 3 % for the current year. for 2018, the forecast has fallen slightly to 0. 3 %, from 0. 4 % in the previous quarter. for 2019, we now expect inflation of page 1 / 4 berne, 15 june 2017 thomas jordan news conference 1. 0 %, compared to 1. 1 % last quarter. the conditional inflation forecast is based on the assumption that the three - month libor remains at – 0. 75 % over the entire forecast horizon. global economic outlook i would now like to turn to economic developments abroad, as these have a considerable bearing on the inflation and economic outlook in switzerland. in line with our expectations, the global economy has strengthened further in recent months. global gdp growth in the first quarter was more robust than in previous quarters. this is due in large part to an encouraging upturn in emerging economies. in the euro area, too, economic recovery has gained strength. owing to the stronger economic growth, the labour market situation in advanced economies has improved further ; with full employment now almost reached in the us, japan, the uk and germany. across the

has continued to decline. the vix index, which measures implied volatility on the us stock market, and which is based on option prices, is virtually back down to the level last seen prior to the outbreak of the financial crisis in 2007. a very similar picture emerges from implied volatilities on the foreign currency and bond markets. the low volatilities are due to comparatively low demand for options to hedge price movements. this suggests that market participants ’ misgivings about prevailing uncertainties have dissipated somewhat, which is likely not least of all a consequence of monetary policy measures by major central banks. in addition, some investors appear to expect that central banks will continue to pursue expansionary monetary policies for the foreseeable future, with low interest rates and an ample supply of liquidity. in switzerland, interest rates remain at a very low level. the yield on ten - year swiss confederation bonds declined to a new low at the beginning of december, at 0. 39 %. no other government has ever recorded nominal ten - year financing costs at such a low level. bis central bankers ’ speeches money market rates also continue to be very low. interest rates on the repo market are predominantly negative. at 1 basis point, the three - month libor lies only just above zero. based on libor futures contracts, the interest rate expectations of market participants are that the low rate environment will continue for the foreseeable future. management of foreign currency investments our foreign currency purchases in early summer to enforce the minimum exchange rate have resulted in high inflows to the snb ’ s foreign currency holdings. these holdings have increased by chf 167 billion since the beginning of the year to chf 425 billion at the end of november. this is a direct consequence of our monetary policy. in the event that foreign currency purchases are necessary to implement the minimum exchange rate, our foreign currency reserves increase, and the balance sheet expands. monetary policy requirements also have highest priority when it comes to managing the foreign currency reserves. this is reflected, on the one hand, in the conditions on which we base our investment decisions, namely security, liquidity and performance. on the other hand, the primacy of monetary policy is also evident in the way we implement our investment policy. we proceed here with great caution to avoid causing distortions in the markets. we take account of the security and liquidity requirements for foreign currency investments by ensuring that a substantial part of our portfolio comprises high - quality government bonds