As a rule, higher inflation is also associated with greater fluctuations in inflation. The costs of higher and strongly fluctuating inflation would have to be set against the alleged benefits, which, in fact, are likely to be minimal. The zero bound for interest rate policy has not proved to be an insurmountable obstacle for monetary policy. Moreover, it is questionable whether an additional one to two percentage points of nominal interest rates would have provided sufficient freedom of action to avoid the zero bound in the crisis. Third, it is suggested that further criteria be added to price stability – relating to employment and growth, for instance. Growth and employment are, of course, essential economic parameters. Our mandate takes them into account with its reference to the development of the economy. However, specific requirements with regard to growth and employment would, once again, raise expectations which the SNB could not meet in the long term. Instead, the goal of monetary policy with respect to the economy must be to reduce larger risks and alleviate extreme situations. A clear example of this was the massive appreciation of the Swiss franc in the summer months of 2011, to which, as you will know, we responded with the minimum exchange rate. Monetary policy is not suited to fine-tuning the economy, however. In practice, we have learned that it is impossible to conduct a monetary policy which responds immediately and in a differentiated manner to all kinds of business cycle fluctuation.

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