This difference is primarily due to the even more expansionary monetary policy compared with last December. With the global economy improving and Swiss business activity picking up, an enduringly expansionary monetary policy will in time lead to higher inflation rates. We consider the current level of the three-month Libor rate as appropriate for the time being to enable the economy to return to sustainable, inflation-free growth. Monetary policy decision-making is difficult under present circumstances. Given the strength of the Swiss franc we have very considerably relaxed monetary policy and cut interest rates much more than the European central bank. We are aware that our expansionary policy entails certain risks. Yet we believe that in view of the sluggish development of the Swiss economy and the strength of the Swiss franc we are conducting a reasonable policy. To adopt a more restrictive monetary policy would be premature at the present time and might jeopardise the still fragile economic recovery, notably in the export sector. We are also of the opinion that we still have sufficient leeway to counter any increased price pressures in good time and that price stability is currently not threatened. The National Bank must be ready and willing to react to changes in the world economy. At the moment, we see mainly two risks which might compel us to reassess the situation and to adjust our monetary policy course. For one thing, the economic recovery in Europe might be delayed somewhat. For another, the Swiss franc could again come under upward pressure.
Jean-Pierre Roth: Review of the Swiss economy Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Geneva, 14 June 2002 *  *  *  The National Bank has decided to leave the target range for the three-month Libor rate unchanged at 0.75% - 1.75%. For the time being, the three-month Libor is to be kept in the middle of the target range. Since the last assessment of 21 March 2002, the National Bank has again adjusted its monetary policy. On 2 May 2002, we lowered the target range for the three-month Libor by 0.5 percentage points to the current level. Some time earlier, on 27 March 2002, we had already lowered repo rates by approximately 10 basis points, which led to a corresponding change in the three-month Libor. In both cases, we acted in response to the appreciation of the Swiss franc, which had led to an undesirable tightening of monetary conditions. Since March 2001, the National Bank has eased its monetary policy substantially, lowering the target range for the three-month Libor by a total of 2.25 percentage points. After the cyclical downturn in the second half of last year, there are now signs that the world economy is starting to pick up, which will also benefit economic activity in Switzerland. However, uncertainties regarding the upswing in Switzerland persist. For the time being, the National Bank will thus maintain its expansive monetary policy stance. This does not jeopardise price stability.