basis points on 2 august to a low of 0. 3 basis points on 5 september. other money market rates then fell to historical lows. at that time, futures contracts on the three - month libor even implied negative future rates. these negative levels were the inevitable result of the exceptional liquidity measures i mentioned earlier. though the current liquidity levels in the swiss franc money market are still extremely high, and interest rates are fluctuating around zero, conditions on the money markets have slowly started to normalize and extremely negative rates have disappeared. this is reflected in the recent increase of the three - month libor, which can be ascribed to a normalisation of the rate ’ s risk premium and should therefore not be seen as a change in monetary policy. though few loans are currently being concluded on the interbank market, the libor remains an important benchmark for many credit transactions in the economy. concluding remarks the period of low interest rates in which we live is the outcome of cyclical and secular circumstances which are unlikely to last forever. even if we accept the “ savings glut ” hypothesis, the demographical and regional factors to which it refers could soon lose relevance. while the call for deleveraging should prompt increased savings in advanced economies, the demographic forces in the west are likely to have an opposite effect on the supply of savings. similarly, the maturing of emerging markets in the east should lead to smaller current account surpluses and to a gradual reduction in the build - up of precautionary reserves by public authorities. it is also clear that the increased risk appetite associated with the “ great moderation ” was, at least to some extent, based on over - optimistic assumptions. these conditions are unlikely to recur in the future, therefore implying that we will probably not observe again the very low risk and term premia that characterized the end of the 1990 ’ s and the beginning of the 21st century. at the cyclical level, the present low interest rates are the appropriate “ full throttle ” response to a very severe global economic crisis, which occurred on the back of the most acute financial crisis since the “ great depression ” of the 1920 ’ s and 1930 ’ s. however, even if there are implicit or explicit calls for interest rates to remain “ low for long ” everywhere – including switzerland – the corresponding monetary policy remains a cyclical response to a cyclical phenomenon, which, from a historical perspective, should be relatively short - lived. thus, as

it has reduced exchange rate volatility and given business leaders a better basis for planning. there are growing indications that the swiss economy is stabilising. for 2012, the snb is now forecasting moderate growth, at close to 1 %. the situation on the financial markets has also eased a little of late. it remains very uncertain, however, whether the advances made in solving the european sovereign debt crisis will succeed in defusing the situation permanently. moreover, there is a risk that geopolitical tensions will lead to a further rise in the price of oil. the snb ’ s latest analysis has led us to adjust our conditional inflation forecast downwards once again. as my first slide highlights, the most recent forecasts for 2012 show an inflation rate of – 0. 6 %, as compared to a rate of 0. 3 % in 2013 and 0. 6 % in 2014. price stability is therefore assured. that said, if developments in the international economy prove to be worse than foreseen, or if the swiss franc does not weaken further, as it is expected to, downside risks for price stability could re - emerge. whatever the case may be, the snb stands ready to take further measures at any time, if the economic outlook and the risk of deflation so require. bis central bankers ’ speeches explanations for low interest rates today ’ s low interest rates are a defining feature of the current economic environment far beyond the swiss borders and this has been the case for some time. i will hence paint a picture of the global situation with broad brushstrokes, before outlining the specifics of the swiss case. the current low interest rate levels can be viewed as the endpoint of a downward trend that has marked the last twenty years and which has been accentuated by the necessary policy responses to the current economic crisis. as my second slide shows, one can observe a significant and continued decrease in long - term nominal rates of various maturities since the early 1980 ’ s. several factors are responsible for this evolution. let me first discuss the roots of some of the longer - term trends, before focusing on post - 2007 developments. long - term trends central banks ’ credible commitment to price stability could well explain the downward trend in nominal interest rates experienced by most mature economies in this period. as we see in slide 3, inflation in g7 countries declined from particularly high levels in the mid - 1970 ’ s, and again in the early 1980 ’ s, to relatively