Inflation will reach its low point in the third quarter of 2015, at –1.2%. For the subsequent period, the new inflation forecast is slightly higher than in March due to the rise in oil prices. The short and medium-term forecast is up slightly, by 0.1 percentage points to –1.0% for 2015 and to –0.4% for 2016. The forecast continues to indicate that inflation will move back into positive territory at the beginning of 2017; there will be a slight slowdown in the rate of increase as the year progresses. The inflation forecast for 2017 is down by 0.1 percentage points, to 0.3%. The conditional forecast assumes that the three-month Libor will remain at –0.75% over the entire forecast horizon, and that the Swiss franc will weaken. Global economic outlook As our inflation forecast is heavily influenced by economic developments abroad, let me now present our assessment of the global economy. Global economic growth was weaker than expected in the first quarter of 2015, and this development had a detrimental impact on world trade. In the US, GDP declined slightly, partly due to special factors. Moreover, the strong US dollar weighed on exports. In the euro area, however, the economy continued to pick up, supported by persistent euro weakness and improved lending conditions. In contrast to the previous quarter, all of the large member states contributed to growth. Italy reported GDP growth for the first time since entering a multi-year recession. In Japan, too, the economy gained momentum.
My colleague, Fritz Zurbrügg, will provide further details on interest rate developments on the money and capital markets. Despite the low interest rates, mortgage growth has continued to weaken slightly in recent months. Notwithstanding this, imbalances on the mortgage and real estate markets remain high. My colleague, Jean-Pierre Danthine, will discuss this in greater depth in his remarks. 1  2  In October 2014, Consensus Economics projected inflation expectations of 1.4% for the period 2020–2024; in April 2015, it put these at 1.5% for the period 2021–2025. Long-term inflation expectations are only surveyed on a half-yearly basis. BIS central bankers’ speeches  In light of the uncertainty regarding the future of Greece, the Swiss franc continues to serve as a safe haven currency. In trade-weighted terms, the Swiss franc is still approximately 12% higher than it was at the beginning of the year. Over time, negative interest rates on the Swiss money and capital markets should help to correct the overvaluation of the Swiss franc. The rise in long-term interest rates abroad has also led to a widening of the interest rate differential with these countries of late. As conditions continue to normalise on international financial markets, investments in other currencies should become more attractive; this, in turn, is likely to help ease the overvaluation of the Swiss franc. The slowdown we are now observing in the economy also suggests that the Swiss franc is very unlikely to remain persistently high. Monetary policy outlook I shall now move on to our monetary policy.