Thomas Jordan: Monetary policy and financial markets - what may we
expect in 2008?
Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss
National Bank, at the Messe Fonds 2008, Zurich, 31 January 2008.
The complete speech can be found in German on the Swiss National Bank's website (www.snb.ch).
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The problems linked to the US housing and mortgage market dominated international
financial markets in 2007. Despite the difficulties on the financial markets in the second half
of the year, the global economy was robust last year. For 2008, the outlook for global
economic growth has deteriorated and become more uncertain.
The turbulence in the financial sector led to a considerable increase in risk premiums in
2007. In the past few years, these premiums had been very low, and even after the recent
increase they remain modest by historic standards. Due to the higher level of economic
uncertainty in 2008, the process of adjustment in risk premiums looks set to continue in
various markets.
From the current standpoint, the Swiss National Bank anticipates a somewhat slower pace of
growth for Switzerland in 2008, although the economy should remain robust. However, the
risks have increased in the recent period. As a result of the oil price hikes, inflation in
Switzerland is likely to rise above 2% in the first half of 2008. Despite raised stock exchange
volatility, the SNB does not judge that any additional actions are necessary at present. The
quarterly assessment in mid-March 2008 will provide the opportunity to assess the inflation
and economic outlook on the basis of new data.