The negative interest rate and our willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency. The Swiss franc is still significantly overvalued. Compared to September, the new conditional inflation forecast has been revised slightly downwards in the short term. This mainly reflects the fact that inflation in October and  Page 1/5  Berne, 15 December 2016 Thomas Jordan  News conference  November was somewhat lower than expected. However, our expectations for the mediumterm development of inflation remain essentially unchanged. We continue to anticipate an inflation rate of –0.4% for the current year. For 2017, the inflation forecast is down to 0.1%, from 0.2% in the previous quarter. For 2018, we now expect inflation of 0.5%, compared to 0.6% in the third quarter. The conditional inflation forecast is based on the assumption that the three-month Libor remains at –0.75% over the entire forecast horizon. Global economic outlook  I would now like to turn to economic developments abroad, as these have a considerable bearing on the inflation and economic outlook in Switzerland. Since the last monetary policy assessment in September, the global economy has developed in line with our expectations. It has continued to recover and capacity utilisation in many countries is improving gradually. This is especially evident in the labour market, where job numbers are on the rise and unemployment is declining. However, global economic growth is moderate and not yet broad-based.
The two elements on which our monetary policy is based – the negative interest rate and our willingness to intervene – are both helping to reduce pressure on the Swiss franc. Thus, despite periods of heightened uncertainty over the last few months, the franc has remained quite stable overall. Furthermore, the negative interest rate has led to lower interest on the capital market, which is facilitating corporate financing. In other words, our expansionary monetary policy is effective. The negative interest rate and our willingness to intervene in the foreign exchange market continue to be both necessary and  Page 4/5  Berne, 15 December 2016 Thomas Jordan  News conference  appropriate. This is because inflation is still very low, production capacity is not yet being fully utilised and the Swiss franc continues to be significantly overvalued. Our monetary policy stabilises price developments and supports economic activity in Switzerland. Ladies and gentlemen, thank you for your attention. It is now my pleasure to give the floor to Fritz Zurbrügg, who will speak about current developments in the area of financial stability. Page 5/5