SNB Press Release
Even at the current rate, the Swiss franc is still high. In the foreseeable future, there is no risk of inflation in Switzerland. Compared to December, the inflation forecast has even fallen further. If developments in the international economy are worse than foreseen, or if the Swiss franc does not weaken further, as expected, downside risks for price stability could re-emerge. The SNB stands ready to take further measures at any time if the economic outlook and the risk of deflation so require.
Developments in the global economy are mixed. While growth in the US was surprisingly positive in the fourth quarter, GDP fell in the euro area and Japan. In Switzerland, growth has slowed significantly over the course of the past year. Added value declined in the fourth quarter in industries affected by exchange rate movements. While the high value of the Swiss franc continues to present enormous challenges to the economy, the minimum exchange rate is having an impact. It has reduced exchange rate volatility and given business leaders a better basis for planning. There are growing indications that Switzerland’s economy is stabilising. For 2012, the SNB is now forecasting moderate growth, at close to 1%.
The situation on the financial markets has eased somewhat recently. Uncertainty remains very high, however. It is unclear whether the advances in solving the European sovereign debt crisis will succeed in defusing the situation permanently. Moreover, there is a risk that geopolitical tensions will lead to a further rise in the price of oil. On the Swiss mortgage and real estate market for residential property there are growing signs of imbalances. Should these imbalances increase further, this could lead to considerable risks to financial stability.