A highly topical issue is, for instance, how developments in stock-markets, which are now of major importance for households, are likely to affect private consumption. Then, of course, forecasts can be wrong simply because something unexpected happens. The Gulf war and the Asian crisis are two examples but even smaller shocks can upset earlier predictions. The uncertainty that is inherent in decision-making is handled by not concentrating exclusively on one forecast for the economy and inflation. We also look at a spectrum of risks in the form of alternative scenarios. Last December, for instance, it was conceivable that economic activity would be weaker on account of a slowdown in the United States, with repercussions on the Swedish economy and inflation. At the same time, factors that might lead to higher inflation were the wage negotiations going wrong, the oil price rising and the exchange rate remaining weak. Since then the picture has shifted; weaker activity and a lower oil price have reduced the risks of inflation, though there are still certain upside risks from domestic inflation, future wage agreements and the weak exchange rate. We try to gauge the probability of each scenario and multiply this probability by the effects on inflation. In this way we arrive at a distribution of the probabilities in our assessment of inflation. The result serves as a foundation for monetary policy. A broad, comprehensive internal discussion Monetary policy is discussed by the Executive Board eight to ten times a year.
We do not burden the banking system any more than is necessary for us to be able to steer short-term money market rates. Ladies and gentlemen, we monitor the impact of negative interest precisely, and we take the side-effects seriously. However, we remain convinced that the benefits it brings Switzerland as a whole clearly outweigh the costs. The negative interest rate and the willingness to intervene are currently the best instruments for ensuring appropriate monetary conditions and thus securing price stability and supporting the economy. Page 4/6  Berne, 12 December 2019 Thomas Jordan  News conference  Monetary policy outlook  Allow me to summarise the key messages with regard to our monetary policy. We anticipate that our economy has expanded by around 1% this year. We are expecting growth of between 1.5% and 2% next year. Inflation expectations are within the range consistent with price stability. The conditional inflation forecast for the coming quarters is slightly lower than in September, but it is essentially unchanged in the longer term. The Swiss franc remains highly valued, and the situation on the foreign exchange market is still fragile. Against this backdrop, our expansionary monetary policy remains appropriate. Monetary policy and climate change  This brings me now to the significance of climate change for the SNB. When it comes to this key issue, we are focused first and foremost on being able to properly assess the possible consequences for the functioning of economies and financial systems, both in Switzerland and worldwide.