Andréa M Maechler: Financial markets and the progress made in reference interest rate reform

Speech by Ms Andréa M Maechler, Member of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 14 December 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
05 January 2018

I will begin my remarks with a review of the situation on the financial markets, before going on to discuss the progress made in reference interest rate reform.

Situation on the financial markets

Let me start with developments on the financial markets.

The monetary policy pursued by the large central banks was once again the focus of attention for the financial markets in the second half of the year. Given moderate inflation growth, financial market participants are expecting only a very gradual normalisation of monetary policy across the world. Against this backdrop, government bond yields have remained persistently low. Muted expectations regarding a move away from expansionary monetary policy, coupled with favourable economic data and good corporate results, have contributed to largely positive risk sentiment on the financial markets. This has been reflected, for instance, in a stock market rally, lower yield spreads on corporate bonds and reduced demand for safe-haven assets such as the Swiss franc. In this positive market environment, volatility has remained low and volatility for the US equity and bond markets, calculated using option prices, has dropped to record lows (cf. chart 1).