The unexpected economic downturn induced the National Bank to pursue a more expansionary monetary policy in 1996 than announced at the end of 1995. We endeavoured to provide the economy with sufficient monetary leeway for a rapid cyclical recovery and to counteract deflationary pressures emanating from the strength of the Swiss franc. At the end of 1995, we had expected the seasonally-adjusted monetary base to grow by more than 1% but considered it unlikely to reach the medium-term target path by the end of the year. In actual fact, between the fourth quarter of 1995 and the fourth quarter of 1996 the monetary base rose by 5%, thereby already exceeding the target path in summer.
