In December 2001, the National Bank lowered the interest rate target range for the three-month Libor to 1.25%–2.25% and published an inflation forecast assuming a constant interest rate of 1.75%. The forecast projected that inflation in Switzerland would temporarily drop to around 0.5% in the course of the year and would thereafter rise gradually to 1.5% by the end of the three-year forecasting horizon. As regards economic growth in Switzerland, the National Bank forecast a decline from an estimated 1.5% to approximately 1.0% in 2002. Initially, the National Bank therefore continued to implement its expansionary monetary policy; this was reflected, among other things, in the strong growth of the money stock M3.
