The SNB reviews its monetary policy on a regular basis to ensure that it is appropriate for the maintenance of price stability. With this in mind, it publishes a quarterly forecast on the development of inflation over the next three years. The period of three years corresponds more or less to the time required for the transmission of monetary policy stimuli to the economy. Forecasts over such a long horizon involve considerable uncertainties. However, by publishing a long-term forecast, the National Bank emphasises the need to adopt a forward-looking stance and to react at an early stage to any inflationary or deflationary threats.
The National Bank’s inflation forecast is based on a scenario for global economic developments and on the assumption that the reference rate published at the same time as the forecast will remain constant over the entire three-year forecasting period. The forecast issued by the SNB thus maps the future development of prices based on a specific world economic scenario and an unchanged monetary policy in Switzerland. For this reason, it is not directly comparable with forecasts which incorporate expected monetary policy decisions.
