downturns. you ’ d therefore expect all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice them to be correlated this way. in fact, in the uk data, short - term interest rates have become more tightly correlated with economic growth since inflation targeting was introduced. since the financial crisis, with policy interest rates pressed up against the effective lower bound, qe has instead become the marginal instrument of policy for many central banks. with much less of a track record to go on, it ’ s harder to demonstrate as clearly the cyclical behaviour of asset purchases ( though the direction of the correlation – qe tends to happen when growth is weak – is clear enough ). nor is the pro - cyclicality of bond yields as evident as it is for short - term interest rates. nevertheless, if an economic downturn were sufficiently widespread, and expected to persist for some time, it ’ s quite possible that expected future interest rates ( and therefore bond yields ) would decline of their own accord, even without the assistance of qe and even if one of the consequences of the downturn was also a rise in public - sector borrowing. there is no correlation either, in the long - term uk data, between long - term bond yields and levels of government debt. that ’ s not to say that qe has no effect on monetary conditions. at least for a time, and like a reduction in the policy rate, it helps to reduce the real cost of borrowing, for the private as well as the public sector. but it ’ s important to understand that policy is only one of many influences on those costs. a “ model ” of bond yields that has them responding only to public - sector debt issuance, with or without purchases by the central bank, performs very poorly in the data. one cannot conclude from a coincidence of higher government borrowing on the one hand and lower interest rates on the other ( whether short or longer - term ) that monetary policy is doing anything other than what it should do. as i said in the introduction, the acid test is ultimately the behaviour of inflation itself. anyhow, let ’ s have a look at some of the numbers, starting with short - term policy changes. charts 3a and 3b get across clearly the correlation with economic activity under inflation targeting. for the post - crisis period they both make some attempt to include shifts in qe, via a translation into the equivalent

beginning of the year, and the smi, switzerland ’ s leading index, has lost more than 15 % over the same period ( cf. chart 3 ). foreign exchange markets were likewise heavily shaped by the shift in monetary policy : the us dollar, for instance, has appreciated more than 7 % on a trade - weighted basis since the beginning of the year. the trade - weighted euro, on the other hand, has lost around 1. 5 % and the japanese yen has actually depreciated by more than 10 % on a trade - weighted basis over the same period. the swiss franc temporarily appreciated immediately following the outbreak of the war in ukraine. the trade - weighted swiss franc exchange rate, however, was recently below its level at the beginning of the year ( cf. chart 4 ). adjustment of the threshold factor i would now like to discuss the lowering of the threshold factor from 30 to 28 as mentioned earlier by thomas jordan. with this technical adjustment, which will take effect from 1 july 2022, we will ensure that sufficient amounts of sight deposits are subject to negative interest, and that the latter is being passed on to the money market as intended. from march 2022, upward pressure built up on the short - term rates on the secured money market. this stemmed from the fact that the exemption thresholds had risen over time due to the dynamic calculation model, which meant that there were no longer sufficient amounts of sight deposits subject to negative interest. to keep the secured short - term money market rates close to the snb policy rate, the snb provided additional liquidity to the money market via repo transactions as a temporary measure. however, given that the increase in exemption thresholds is structural in nature, it is appropriate that we lower the threshold factor. this will result in the secured short - term money market rates being close to the snb policy rate again without the snb having to regularly provide larger amounts of liquidity. the snb will continue to regularly review the basis for calculating the exemption threshold and adjust it as necessary. page 2 / 4 berne, 16 june 2022 andrea m. maechler news conference charts page 3 / 4 berne, 16 june 2022 andrea m. maechler news conference page 4 / 4