As chart 1 shows, in Switzerland inflation remained low in the early post-crisis years, due in particular to the fall in energy prices and strong appreciation of the Swiss franc in the aftermath of the euro area debt crisis. Today, thanks in part to the monetary policy measures taken by the SNB to combat the strong appreciation of the Swiss franc, inflation for imported goods and services has returned to positive territory (cf. red bars). Furthermore, the price of oil is trending upwards. And finally, the consumer price index in Switzerland has been rising again since the beginning of 2017 and currently stands at 1.1% year-on-year. Nonetheless, inflation for domestic goods and services remains moderate despite robust economic momentum and a steadily improving labour market (cf. blue bars). Besides these factors, monetary policymakers may increasingly find themselves grappling with another issue: digitalisation and its impact on the level and dynamics of prices. 1 Digitalisation is affecting almost all sectors of the economy, but its effects are particularly pronounced in retail. In Switzerland, retail trade via online platforms has been experiencing double-digit growth for some years now, while traditional retail has been declining. Last year, online trade already accounted for some 8.5% of all Swiss retail trade. 2 Digitalisation can affect price developments in a variety of ways. On the one hand, the increased competition and greater transparency for consumers that online trade enables may erode the pricing power of traditional retailers. This phenomenon, sometimes called the ‘Amazon effect’, 3 can lower inflation, at least temporarily.

First, last February, concerns surrounding a faster-than-expected tightening of monetary policy in the US triggered a major stock market sell-off and a corresponding volatility spike (green curve). Then, in May, political uncertainty in Italy led to a considerable widening of the yield spread between German and Italian 10-year bonds (blue curve). Demand for various asset classes regarded as safe havens, such as the Swiss franc, increased. Finally, in August, we witnessed a huge sell-off of certain emerging market currencies and an increase in their volatility (yellow curve). Fears of global contagion resulted in the franc appreciating strongly. It remains a safe-haven currency during periods of high uncertainty. Indeed, an analysis of the options market confirms that the Swiss franc was in demand as a safe-haven currency during the three events described above. Risk reversal shows that during these events, participants were prepared to pay a higher premium to hedge against losses resulting from a steep appreciation of the Swiss franc vis-à-vis the euro than against a depreciation. As we can see from chart 5, three-month risk reversal for the EURCHF pair was significantly negative. Even today, risk reversal is still well below zero, indicating that the situation on the foreign exchange market remains generally fragile. And now I would like to hand back to Andréa Maechler. As we have just seen, without this kind of in-depth analysis as a supplement to traditional macroeconomic analysis, it would not be possible for us to capture the complexity of markets simply and comprehensibly.