the population as a result of immigration made a positive contribution to growth as well. furthermore, during the pandemic in particular, there was also a rapid and targeted fiscal policy response. ii. new constraints the pandemic and the war in ukraine have fundamentally changed the constraints on central banks. in particular, inflation has risen strongly in many countries over the past year, and uncertainty has also increased markedly in many respects. the snb, too, is at present confronted with an inflation rate that is significantly above the range we equate with price stability. as in recent years, inflation in switzerland is currently lower than in many other countries. besides the strong swiss franc, the energy mix in switzerland has thus far also helped to keep inflation comparatively low. nevertheless, the current level of 3. 4 % is still the highest inflation our country has seen since the 1990s. furthermore, there are signs that inflation is increasingly spreading to goods and services that are not directly affected by the pandemic or the war in ukraine. in fact, it appears that in the current environment, higher prices are being passed on more quickly – and are also being more readily accepted – than was the case until just recently. in conjunction with this, longerterm inflation expectations have also been moving upwards slightly over the past quarters. furthermore, there are clear indications of wage growth gathering momentum. how is the snb handling this situation? we already made our initial response to the impending inflationary pressure in the final months of 2021. both inflation and our inflation forecast at that time were still at a very low level. at our monetary policy assessment in december, we announced that we would allow the swiss franc to appreciate to a certain extent in nominal terms in order to reduce the inflationary pressure from abroad. the swiss franc gained around 4 % in nominal terms between autumn 2021 and spring 2022, making imports cheaper and so countering the general increase in prices. in june 2022, we then raised page 4 / 16 the snb policy rate for the first time in 15 years, by half a percentage point to −0. 25 %. at the same time, we signalled that further interest rate moves may be necessary in the foreseeable future. with our policy rate rise, the swiss franc appreciated further. the need for monetary policy tightening is shown by our conditional inflation forecast of june 2022 ( cf. chart 5 ). according to this forecast, and assuming that the snb policy rate remains

explicitly provides for the use of additional monetary policy measures to influence the exchange rate or the interest rate level as necessary. page 3 / 9 franc. fx interventions have a direct impact on the swiss franc and thus on the prices of imported goods and services ( cf. chart 4 ). in the most recent tightening cycle, the snb counteracted the rise in inflation by raising its policy rate and letting the swiss franc appreciate. when inflation started to rise in 2021, the snb reacted first by letting the swiss franc appreciate ( green line in chart 5 ), which dampened external price pressures. in addition, the snb started to sell foreign exchange in the second half of 2022. without this appreciation, the contribution of imported inflation from mid - 2022 onwards would have been even larger ( yellow bars in chart 5 ). 6 furthermore, the snb began to raise its policy rate rapidly from june 2022. this is reflected in the red line in chart 5, which shows the 1 - year saron 7 - based swap rate. the rise in interest rates contributed to a tightening of monetary conditions, thereby helping to contain domestic inflation by dampening second - round effects ( blue bars in chart 5 ). the combined effects of higher interest rates and the appreciation of the swiss franc have led to a significant tightening of monetary conditions in switzerland since 2021. in order to gauge an economy ’ s monetary conditions, the effects of interest rates, the exchange rate and other factors can be aggregated into a single index. in chart 6 we show the goldman sachs financial conditions index ( fci ) for switzerland. in this index, interest rates and the exchange rate have significant weights ( over 60 % and 20 % respectively ). 8 indeed, the 20 % weight of the exchange rate in the swiss fci is the highest of all countries for which goldman sachs calculates fcis. as you can see, monetary conditions in switzerland tightened considerably between 2021 and the end of 2023. chart 6 shows that this was due both to higher interest rates ( red area ) and, even more importantly, the appreciation of the swiss franc ( blue area ). to influence monetary conditions, the snb must implement its interest rate policy effectively in order to enable strong transmission to market interest rates. it is important to be clear about the meaning of two terms : implementation and transmission. in this speech, we use the term ‘ implementation ’ to describe the measures that the snb takes to ensure that