Our new conditional inflation forecast is based on the assumption that the SNB policy rate is 1.5% over the entire forecast horizon (cf. chart 1). Stronger second-round effects and the fact that inflationary pressure from abroad has increased again mean that, despite the raising of the SNB policy rate, the new forecast is higher through to mid-2025 than in December. The new forecast puts average annual inflation at 2.6% for 2023, and 2.0% for 2024 and 2025 (cf. table 1). Without today’s policy rate increase, the inflation forecast would be even higher over the medium term. Uncertainty regarding price developments going forward remains high, and there is above all the risk of elevated inflation becoming embedded. Global economic outlook  What is the economic outlook? The global economy hardly grew in the fourth quarter. Nevertheless, Q4 2022 and Q1 2023 will likely be slightly less weak overall than expected in December. Inflation is currently clearly above central banks’ targets in many countries. Against this background, numerous central banks have tightened their monetary policy further. The growth outlook for the global economy in the coming quarters remains subdued. At the same time, inflation is likely to remain elevated worldwide for the time being. Over the medium term, however, it should return to more moderate levels, not least thanks to monetary policy and due to the economic slowdown. Our scenario for the global economy is subject to significant risks, in particular due to the recent turmoil in the global financial sector.
Swiss economic outlook  I now turn to the economic outlook for Switzerland. GDP stagnated in the fourth quarter. For 2022 as a whole, GDP grew by 2.1%. The labour market remained robust, and overall production capacity has been well utilised. Page 3/6  Zurich, 23 March 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  Despite the slight upturn in economic activity in recent months, growth is likely to remain modest for the rest of the year. Subdued demand from abroad and the loss of purchasing power due to inflation are having a dampening effect. Overall, Swiss GDP is likely to increase by around 1% this year. The forecast for Switzerland, as for the global economy, is subject to high uncertainty. In the short term, the main risks are an economic downturn abroad and adverse effects of the turmoil in the global financial sector. Monetary policy outlook  Ladies and gentlemen, allow me to return to our monetary policy. Inflation is currently higher than we had expected in December, and inflationary pressure has risen again also due to second-round effects. The renewed increase in our policy rate is therefore necessary to ensure that inflation returns to the range consistent with price stability over the medium term. It cannot be ruled out that a further tightening of monetary policy will be necessary to ensure price stability.