These include targeted utility rebates that directly alleviate the higher cost of living for households. Similarly, SMEs received a one-off cash grant in this year’s Budget to help offset higher business costs. Implications for asset prices My third point is that it is important to respond appropriately to rising asset prices, including in the housing market. Following the recent financial crisis, major central banks reduced policy interest rates to historical lows. Credit growth in this region has recovered strongly, in Singapore and other Asian economies. There is a danger that systemic risk can develop and crystallise in a number of ways. For instance, low interest rates may encourage risky borrowing and lending practices, to create a build-up of leverage in households’ and banks’ balance sheets. Capital flows into Asia can also contribute to higher bank leverage, as well as asset price inflation, with the risk of sharp corrections in asset prices should these capital flows reverse quickly. Past experiences have shown that when highly leveraged asset markets correct sharply, they can lead to enormous stress on the banking system and significant collateral damage on the real economy. The views among central bankers have therefore increasingly shifted towards the need to take pre-emptive measures at an early stage. The global experience with monetary policy, however, suggests that broad policy instruments like exchange rates and interest rates have very significant collateral effects, and are often subject to long and variable lags before impacting asset markets.

However, it is important to note that pragmatism is not synonymous with unbounded discretion and a lack of discipline in policy-making. This brings me to the second principle: consistency. Consistency While decision-making should be pragmatic, it should be consistent over time. Policy decisions must be based on a firm commitment to the objective of price stability. They cannot be based on a period-by-period optimisation of short-term gains in terms of output stabilisation or, more generally, on political opportunism. If we are to reach consistent decisions, we must make sure that all available information is used systematically. This is especially important during prolonged periods of largerthan-usual forecast errors. In such situations, additional data and information can help assess the likelihood that the forecast errors are not just due to unpredictable shocks, but to underlying structural changes in the economy. 2/4  BIS - Central bankers' speeches  The SNB is currently investing in such alternative data and information. This helps us to improve our understanding of inflationary pressures and assess the possibility of a change in the underlying inflation regime. For example, we are monitoring disaggregated CPI data more closely. We are also experimenting with machine-learning models that are trained using a large set of economic and alternative indicators. Furthermore, we collect additional data from our network of regional representatives who conduct one-on-one discussions about the current economic situation in Switzerland with around 250 company managers throughout the country every quarter.