BERNE (MNI) – The Swiss National Bank Thursday issued the following
statement after deciding to leave its target range for the three-month
Libor rate unchanged:

“The Swiss National Bank (SNB) is maintaining its expansionary
monetary policy. The target range for the three-month Libor remains at
0.0-0.75%, and the SNB intends to keep the Libor within the lower part
of the target range at around 0.25%.

The global economic recovery is continuing, even if the outlook has
dampened somewhat in the past few weeks. The level of capacity
utilisation in the Swiss economy is rising.

Despite the strong appreciation of the Swiss franc, the economy
continues to benefit from robust international demand. However, margins
in the export industry are coming under increasing pressure. For 2011,
the SNB is maintaining its forecast of real growth in Swiss GDP of
around 2%.

Overall, however, downside risks predominate. These include, in
particular, the debt problems in the euro area periphery. In addition,
high deficits require several countries in various parts of the world to
undertake fiscal consolidation measures, economic fragility
notwithstanding.

The recent commodity price increase weighs on global economic
growth and poses upside risks to inflation. In Switzerland, the main
risks remain, on the one hand, the effects of the strong Swiss franc on
the export industry and, on the other, the danger of overheating in the
real estate sector. Until the beginning of 2012, the path of the SNB’s
conditional inflation forecast lies above that of the previous quarter’s
forecast.

This is attributable to the assumption of higher oil prices
compared to the previous quarter and somewhat higher import prices.
Assuming an unchanged three-month Libor of 0.25% over the forecast
horizon, the SNB expects average inflation rates of 0.9% for 2011, 1.0%
for 2012 and 1.7% for 2013. Over the course of 2012, the path of the new
forecast is lower than that of March because of the latest appreciation
of the Swiss franc and the slightly slower development of international
growth.

Towards the end of the forecast period, inflation rises briskly and
exceeds the upper bound of 2%. This shows that the current expansionary
monetary policy cannot be maintained over the entire forecast horizon
without compromising price stability in the long term. Due to the risks
mentioned previously, the conditional inflation forecast is, however,
associated with a high level of uncertainty.”

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