Recent Swiss experience in monetary policy strategy

## Jean-Pierre Roth: Recent Swiss experience in monetary policy strategy

Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at a seminar on monetary theory and policy, University of Fribourg, Fribourg, 28 November 2007.

The complete speech can be found in French on the Swiss National Bank's website (www.snb.ch).

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One continually recurring element in the history of the Swiss National Bank has been the application of a clear set of rules that we refer to nowadays as ′ strategy ′ . The SNB ′ s monetary policy strategy consists of three elements: a definition of price stability, an inflation forecast and a fluctuation range assigned to a short-term interest rate.

Experiences with this strategy since its introduction in the year 2000 - judged in terms of both price stability and cyclical developments in the economy - have demonstrated its value. Nevertheless, certain aspects of the strategy have been questioned by academics and by central bankers. These include inflation forecasting under the assumption of a fixed Libor, the choice of the reference interest rate, the role of monetary aggregates and exchange rates in the SNB ′ s models, and the decision not to publish the minutes of Governing Board meetings. However, these deliberately selected elements in fact serve to reinforce the legitimacy of the SNB ′ s strategy.

BIS Review 139/2007