Excerpt from the Swiss Bank Monetary Policy Committee statement:
The SNB stands ready to enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities, and to take further measures, as required. Although the situation on the global financial markets has eased somewhat, the minimum exchange rate, with the three-month Libor close to zero, remains essential. It prevents an undesired tightening of monetary conditions were the upward pressure on the Swiss franc to intensify once again.
The SNB’s conditional inflation forecast is somewhat higher in the short term, due to a rise in the oil price since the last quarter and the slightly more positive assessment of the economic situation. As last quarter, the forecast is based on a three-month Libor of 0.0 percent over the next three years. There are therefore signs of inflation risks in Switzerland.
In the second quarter, GDP growth in the advanced economies was stronger than expected, especially in Germany and France. By contrast, economic activity in the emerging economies was sluggish. In the near term, global growth should gradually gain in momentum and become more broad based. Nevertheless, the recovery is likely to remain subdued. Sudden changes in expectations on the further course of monetary policy in key currency areas could lead to increased volatility on the financial markets.
In Switzerland, GDP growth in the second quarter exceeded expectations. While the service industries experienced mainly robust growth, value added in manufacturing declined. Because of the unexpectedly positive second quarter, the SNB has now revised its 2013 growth forecast upwards from 1.0–1.5 percent to 1.5–2.0 percent.
On the domestic mortgage and real estate markets, the danger persists that imbalances will increase further. Mortgage lending is still climbing more rapidly than GDP. Additionally, starting at a high level, real estate prices increased further. The SNB will continue to monitor the situation closely.