Against this backdrop, we continue to expect the economy to grow by around 1.5% in 2019. As is the case with the global economy, the risks for this scenario remain to the downside. In particular, an unexpectedly sharp slowdown internationally would quickly spread to Switzerland. Exchange rates, interest rates and inflation expectations  Let me now move on to address monetary conditions – that is to say, exchange rates and interest rates – as well as inflation expectations. My comments here relate to the developments since our last news conference in December, and not just those during the past quarter. Monetary conditions are similar today to six months ago. The Swiss franc remains highly valued. The situation on the foreign exchange market is still fragile. When the trade dispute between the US and China escalated again in May, the Swiss franc and the Japanese yen appreciated. Both currencies are sought after as safe havens in periods of uncertainty. In light  Page 4/5  Berne, 13 June 2019 Thomas Jordan  News conference  of the high valuation of the franc and the fragility of the situation, our willingness to intervene remains necessary, as does the negative interest rate. This brings me to the development of interest rates since December. At the beginning of the year, the US Federal Reserve signalled that it would be patient with regard to raising interest rates further.
This was previously necessary because expectations regarding future monetary policy could strongly influence the three-month rate. The SNB policy rate also sets the terms for monetary policy-related transactions with the SNB. The conditions on the money market are currently determined by the interest rate banks pay on their sight deposits at the SNB. We have decided that the interest on these deposits will at present correspond to the SNB policy rate, and will thus remain at −0.75%. I will now summarise the importance of the SNB policy rate. From this point onwards, we will use the SNB policy rate in taking and communicating our interest rate decisions. Our conditional inflation forecast will now be based on the assumption of an unchanged SNB policy rate over the relevant horizon. The SNB policy rate signals the interest rate level we will seek to maintain on the short-term money market. In assessing the actual conditions on the money market, we are focusing on SARON. The terms for monetary policy-related transactions will be based on the SNB policy rate. Page 2/5  Berne, 13 June 2019 Thomas Jordan  News conference  This adjustment does not entail any change in our current monetary policy, and in particular our expansionary stance. The inflation forecast of March 2019 and the new forecast can be directly compared with one another.