Philipp M Hildebrand: Economic outlook and monetary policy
Central bank: snb | Type: speech | Date: 2005-11-17

Philipp M Hildebrand: Economic outlook and monetary policy
Speech by Mr Philip p M Hilde brand, Member of t he Gove rning Board of t he Swi ss Na tional Ban k,
Apéritif Marché monétaire, Geneva, 17 November 2005.
The complete speech can be found in French on the Swiss National Bank’s website ().
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The Swiss economy has benefited from a favourable international environment. Activity has remained
strong in the US, whereas it has improved in Japan and, more recently, in Europe. In Switzerland also,
the latest ind icators p oint towards stronger growth. Exports rem ain the en gine of the re covery but
private consumption has also picked up. However, consumer confidence remains fragile in the context
of only mode stly improvin g labou r ma rket condition s. The SNB expects the economic re covery t o
continue. A sudde n adjustment of the US current a ccount imbalance or a furt her increase of ene rgy
prices are predominant risks.
From a monetary point of view, the current situation is characterised by different counteracting forces.
On the one hand, the economic outlook is positive. On the other hand, some risks put this favoura ble
picture into p erspective. Furthe rmore, the in crease of energy pri ces might endanger m edium term
price stability at a time when monetary conditions remain expansive. Last but not least, globalisation
continues to hold do wn the prices of m any goods. In this com plex environment, it is imp ortant that
central ban ks su cceed in pre serving their mo st im portant mo netary asset, namely well a nchored
inflation expectations. In Switze rland, this mean s that as long as the eco nomic recovery remains on
track, we should not postpone for too long the process of normalising monetary conditions. Otherwise,
we would put medium term price stability at risk.