Jean-Pierre Roth: Recent Swiss experience in monetary policy strategy
Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the
Swiss National Bank and Chairman of the Board of Directors of the Bank for International
Settlements, at a seminar on monetary theory and policy, University of Fribourg, Fribourg,
28 November 2007.
The complete speech can be found in French on the Swiss National Bank's website (www.snb.ch).
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One continually recurring element in the history of the Swiss National Bank has been the
application of a clear set of rules that we refer to nowadays as ′strategy′. The SNB′s
monetary policy strategy consists of three elements: a definition of price stability, an inflation
forecast and a fluctuation range assigned to a short-term interest rate.
Experiences with this strategy since its introduction in the year 2000 - judged in terms of
both price stability and cyclical developments in the economy - have demonstrated its value.
Nevertheless, certain aspects of the strategy have been questioned by academics and by
central bankers. These include inflation forecasting under the assumption of a fixed Libor, the
choice of the reference interest rate, the role of monetary aggregates and exchange rates in
the SNB′s models, and the decision not to publish the minutes of Governing Board meetings.
However, these deliberately selected elements in fact serve to reinforce the legitimacy of the
SNB′s strategy.