Following a six-year phase of stagnation, 1997 saw the emergence of a distinct and broadly based recovery. This is the combined result of robust international economic activity, comprehensive restructuring efforts in numerous fields and a stimulating monetary policy of quite some duration. A further contributing factor was that the introduction of the euro did not cause any turbulence in the Swiss franc foreign exchange market. With economic prospects continuing to be favourable, the monetary policy course oriented to price stability had to be gradually adjusted already last autumn. In the meantime, Swiss franc money market rates are conspicuously higher than six months ago, and the differential to euro interest rates has narrowed. The Swiss franc/euro exchange rate has shown a slight reaction to this adjustment.

In an environment characterised by full employment the SNB's policy remains oriented to ensuring price stability in the long term. It is foreseeable that in the coming months the emphasis has to be on keeping the inflation risk within narrow bounds without however hindering the economy from utilising the bigger growth potential in the wake of the restructuring measures.