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Ten Years' Experience with the Swiss National Bank's Monetary Policy Strategy

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  • Thomas J. Jordan
  • Michel Peytrignet
  • Enzo Rossi
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    Abstract

    In December 1999 the Swiss National Bank (SNB) abandoned monetary targeting and introduced a new monetary policy strategy. The cornerstones of the new framework are an explicit definition of what the SNB considers to be price stability, a forecast of inflation over a three-year horizon, and a target range for the three-month Swiss franc Libor. The strategy lived up to expectations in every respect and contributed to strengthening the SNB's credibility. In particular, the new framework's flexibility proved successful in times of financial stress. The term reference interest rate contains an automatic monetary stabilizer that has insulated the nonfinancial sector from much of the turbulence. The major challenge lying ahead is sustained accuracy in the assessment of future inflation.

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    Bibliographic Info

    Article provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.

    Volume (Year): 146 (2010)
    Issue (Month): I (March)
    Pages: 9-90

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    Handle: RePEc:ses:arsjes:2010-i-1

    Contact details of provider:
    Postal: c/o SNB/BNS, B├Ârsenstrasse 15, PO Box 2800, CH-8022 Z├╝rich
    Phone: +41 (0)44 631 32 34
    Fax: +41 (0)44 631 39 01
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    Web page: http://www.sjes.ch
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    Related research

    Keywords: Monetary policy strategy; inflation targeting; monetary policy rules; inflation forecasts; financial crisis; unconventional monetary policy;

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    References

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    1. Hans Gersbach & Volker Hahn, 2011. "Monetary Policy Inclinations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(8), pages 1707-1717, December.
    2. Baltensperger, Ernst & Fischer, Andreas M. & Jordan, Thomas J., 2007. "Strong goal independence and inflation targets," European Journal of Political Economy, Elsevier, vol. 23(1), pages 88-105, March.
    3. Lawrence Christiano & Roberto Motto & Massimo Rostagno, 2007. "Two Reasons Why Money and Credit May be Useful in Monetary Policy," NBER Working Papers 13502, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Nikolay Markov & Thomas Nitschka, 2013. "Estimating Taylor Rules for Switzerland: Evidence from 2000 to 2012," Working Papers 2013-08, Swiss National Bank.

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