Antoine Martin, Thomas Moser: The implementation and transmission of the Swiss National Bank's monetary policy during the recent tightening cycle

Speech by Mr Antoine Martin, Member of the Governing Board of the Swiss National Bank and Mr Thomas Moser, Alternate Member of the Governing Board of the Swiss National Bank, at the Money Market Event, Zurich, 18 April 2024.

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

Ladies and gentlemen

Welcome to this year's Money Market Event of the Swiss National Bank in Zurich. It is a great pleasure to see so many of you here this evening.

A year ago, at the time of our last Money Market Event in Zurich, the number one issue for the SNB and central banks worldwide was inflation. Global inflation had risen sharply in 2021, driven by a surge in energy prices, supply chain disruptions and strong economic demand as the coronavirus lockdowns came to an end (cf. chart 1). The war in Ukraine further exacerbated the situation. As a result, inflation also picked up in Switzerland (red line in chart 1). Swiss consumer price inflation peaked at 3.5% in August 2022. From a Swiss perspective, this was a worryingly high rate, even though the inflation rates of some of our main trading partners were significantly higher.

In 2023, inflation began to decline both globally and in Switzerland. In fact, the decline in inflation was faster than originally expected. By June 2023, Swiss inflation had fallen below 2% and was thus back within the range that the SNB equates with price stability. At our last monetary policy meeting in March, we decided to lower the SNB policy rate by 0.25 percentage points to 1.5%. This was our first interest rate cut since 2015. Our latest forecast indicates that inflation is likely to remain within the price stability range over the next three years, even taking into account the recent interest rate cut (cf. chart 2).