Monetary policy decision We have decided to leave the current Libor target range unchanged and to continue aiming for the middle of the range. This decision is based on the following considerations. Our analyses show that, following the slowdown in the global economy, the outlook for inflation has improved, if we disregard the temporary rise that will occur over the next few months as a result of the rise in oil prices. Moreover, the turmoil affecting the international financial markets and the uncertainty with respect to the extent of possible fall-out on the rest of the economy all call for prudence. The risk of a rise in inflation has not been dispelled; of that there can be no doubt, given the rise in oil prices, the weakness of the Swiss franc against the euro, and the high level of capacity utilisation. Nevertheless, we do not consider this to be a matter of urgency and view an adjustment in our policy as unnecessary under the current circumstances. It is evident that we will continue to keep a very close watch on developments in the situation. Inflation forecast graph I will now turn to the final part of my remarks. What is our inflation forecast? The dashed red curve on the graph represents the new forecast. It relates to the period between the fourth quarter of 2007 and the third quarter of 2010, and maps the future development of inflation on the assumption that the 2.75% level remains constant over the forecasting period.
Jean-Pierre Roth: Recent economic and financial developments in Switzerland Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the end-of-year media news conference, Zurich, 13 December 2007. *  *  *  Economic outlook The last few months have seen a number of remarkable events in the global economy. The US dollar has plunged, dropping below the level attained in 1995 against the Swiss franc. Oil prices have continued to soar, threatening to breach the hundred dollar mark. Sub-prime credit markets continue to disrupt financial markets. How have these factors affected the international economy? The US economy is affected simultaneously by the unfavourable developments in real estate markets, which are impacting on credit markets, and by increasing oil prices. At the same time, the fall in the dollar is bolstering external demand, so that most observers are not forecasting more than a temporary decline in US economic growth next year. As for the European economy – which is less open than the national economies of which it is composed – it is only slightly affected at present by the upturn in the euro, mirroring the downturn in the US dollar. The outlook for European growth in 2008 remains favourable, despite a light downward correction. All in all, the international economic situation remains generally positive, although it is true to say that this assessment is even more uncertain than three months ago.