Swiss Journal of Economics and Statistics

, Volume 146, Issue 1, pp 9–90 | Cite as

Ten years’ experience with the Swiss National Bank’s monetary policy strategy

  • Thomas J. Jordan
  • Michel Peytrignet
  • Enzo Rossi
Open Access


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.


Monetary policy strategy inflation targeting monetary policy rules inflation forecasts financial crisis unconventional monetary policy 




  1. Ball, Laurence (1999), “Policy Rules for Open Economies”, in John B. Taylor (ed.), Monetary Policy Rules, University of Chicago Press.Google Scholar
  2. Baltensperger, Ernst, Philipp M. Hildebrand and Thomas J. Jordan (2007), “The Swiss National Bank’s Monetary Policy Concept— an Example of a ‘Principles Based’ Policy Framework”, Swiss National Bank Economic Study No.3 2007.Google Scholar
  3. Baltensperger, Ernst, Andreas M. Fischer and Thomas J. Jordan (2007), “Strong Goal Independence and Inflation Targets”, European Journal of Political Economy, 23, pp. 88–105.CrossRefGoogle Scholar
  4. Berg, Claes (2005), “Experience of Inflation-Targeting in 20 countries”, Economic Review, 1, pp. 20–47.Google Scholar
  5. Bernanke, Ben S. (2004), “Inflation Targeting”, Federal Reserve Bank of St. Louis Review, 86 (4), pp. 165–168.Google Scholar
  6. Blanchard, Olivier and Jordi Calí (2006), “Real Wage Rigidities and the New Keynesian Model”, prepared for the FRB/JMCB conference Quantitative Evidence on Price Determination, Washington, D.C., September 29–30, 2005.Google Scholar
  7. Blanchard, Olivier and Jordi Galí (2008), “Labor Markets and Monetary Policy: A New-Keynesian Model with Unemployment”, Mimeo, March 6.Google Scholar
  8. Blinder, Alan S. (2006), “Monetary Policy Today: Sixteen Questions and about Twelve Answers”, paper prepared for the Banco de España Conference Central Banks in the 21st Century, Madrid, June 8–9, April 2006.Google Scholar
  9. Carare, Alina and Mark R. Stone (2006), “Inflation Targeting Regimes”, European Economic Review, 50, pp. 1297–1315.CrossRefGoogle Scholar
  10. Cuche-Curti, Nicolas, Pamela Hall and Attilio Zanetti (2008), “Swiss GDP Revisions: A Monetary Policy Perspective”, Journal of Business Cycle Measurement and Analysis, 4 (2), pp. 183–213.Google Scholar
  11. Christiano, Lawrence, Roberto Motto, Massimo Rostagno (2007), “Two Reasons Why Money and Credit May be Useful in Monetary Policy”, NBER Working Paper 13502.Google Scholar
  12. Christiano, Lawrence, Cosmin Ilut, Roberto Motto, and Massimo Rostagno (2007), “Monetary Policy and Stock Market Boom-Bust Cycles”, Mimeo, March 6.Google Scholar
  13. De Fiore, Fiorella and Oreste Tristani (2009), “Optimal Monetary Policy in a Model of the Credit Channel”, Mimeo,
  14. Faia, Ester (2009), “Ramsey Monetary Policy with Labor Market Frictions”, Journal of Monetary Economics, 56, pp. 570–581.CrossRefGoogle Scholar
  15. Faust, Jon and Dale W. Henderson (2004), “Is Inflation Targeting Best-Practice Monetary Policy?”, Federal Reserve Bank of St. Louis Review, 86 (4), pp. 117–144.Google Scholar
  16. Goodfriend, Marvin (1991), “Interest Rates and the Conduct of Monetary Policy”, Carnegie-Rochester Conference Series on Public Policy 34, pp. 7–30.CrossRefGoogle Scholar
  17. Hildebrand, Philipp M. (2004), „Vom Monetarismus zur Inflationsprognose: Dreissig Jahre Schweizerische Geldpolitik“, Öffentliche Vorlesung, Universität Bern, 23. November 2004.Google Scholar
  18. Hildebrand, Philipp M. (2006), „Schweizerische Geldpolitik“, Speech for the Mitgliederversammlung des Vereins IFZ (Institut für Finanzdienstleistungen Zug), Zug, 1. Juni 2006.Google Scholar
  19. Issing, Otmar (2004), “Inflation Targeting: A View from the ECB”, Federal Reserve Bank of St. Louis Review, 86 (4), pp. 169–179.Google Scholar
  20. Jordan, Thomas J. (2007a), „Kommunikation, Transparenz und Geldpolitik“, Referat vor der Vereinigung Basler Ökonomen, Basel, 24. Mai 2007.Google Scholar
  21. Jordan, Thomas J. (2007b), „Wie hat sich das geldpolitische Konzept der SNB bewährt?“, Speech for the Vereinigung Berner Wirtschaftswissenschafter, VBW, 27. Februar 2007, Bern.Google Scholar
  22. Jordan, Thomas J. (2008a), „Geldpolitik und Unsicherheit“, Speech at the University of Freiburg im Breisgau, January 15.Google Scholar
  23. Jordan, Thomas J. (2008b), “Discussion of ‘Monetary Policy Inclinations’ by Hans Gersbach and Volker Hahn”, Swiss National Bank Research Conference 2008.Google Scholar
  24. Jordan, Thomas J. and Michel Peytrignet (2007), “The Path to Interest Rate Management and Inflation Forecasts”, in: The Swiss National Bank 1907–2007, pp. 255–272, NZZ Libor.Google Scholar
  25. Jordan, Thomas J. and Enzo Rossi (2009), “Transparency and Communication of the Swiss National Bank”, Mimeo, Swiss National Bank.Google Scholar
  26. Jordan, Thomas J., Michel Peytrignet and Georg Rich (2001), “The Role of M3 in the Policy Analysis of the Swiss National Bank”, in: Hans-Joachim Klöckers and Caroline Willeke (eds), Monetary Analysis: Tools and Applications, pp. 47–62, European Central Bank.Google Scholar
  27. Jordan, Thomas J., Angelo Ranaldo, and Paul Söderlind (2009), “The Implementation of SNB Monetary Policy”, Financial Markets & Portfolio Management, 23, pp. 349–359.CrossRefGoogle Scholar
  28. Kaufmann, Daniel (2009), “Price-Setting Behaviour in Switzerland: Evidence from CPI Micro Data”, Swiss Journal of Economics and Statistics, 145 (3), pp. 293–349.CrossRefGoogle Scholar
  29. King, Mervyn (1997), “Changes in UK Monetary Policy: Rules and Discretion in Practice”, Journal of Monetary Economics, 39, pp. 87–97.CrossRefGoogle Scholar
  30. Kohli, Ulrich (2008), “Is ‘Inflation Targeting’ Passé?”, paper prepared for the conference The New International Monetary System in the honor of Alexander Swoboda on the occasion of his retirement, International Center for Monetary and Banking Studies and Graduate Institute of International and Development Studies, Geneva, May 30.Google Scholar
  31. Kuttner, Kenneth N. (2004), “The Role of Policy Rules in Inflation Targeting”, Federal Reserve Bank of St. Louis Review, pp. 89–111.Google Scholar
  32. Mackie, David (2007), “Central Bank Communication Hits Diminishing Marginal Returns”, JPMorgan Research, May 11.Google Scholar
  33. Mishkin, Frederic S. (2007), “Inflation Targeting: True Progress or Repackaging of an Old Idea?”, in: The Swiss National Bank 1907–2007, pp. 599–623, NZZ Libor.Google Scholar
  34. Mishkin, Frederic S. (2008), “Monetary Policy Flexibility, Risk Management, and Financial Disruptions”, Speech at the Federal Reserve Bank of New York, January 11.Google Scholar
  35. Peytrignet, Michel (2007), “The Money Supply as an Intermediate Monetary Target”, in: The Swiss National Bank 1907–2007, pp. 236–254, NZZ Libro.Google Scholar
  36. Peytrignet, Michel, and Marcel Savioz (eds) (2010), “The Swiss National Bank’s Suite of Inflation Forecasting Models”, Swiss National Bank Economic Study No.7 2010.Google Scholar
  37. Ranaldo, Angelo, and Enzo Rossi (2010), “The Reaction of Asset Markets to Swiss National Bank Communication”, Journal of International Money and Finance, 29, pp. 486–503.CrossRefGoogle Scholar
  38. Rich, Georg (1997), “Monetary Targets as a Policy Rule: Lessons from the Swiss Experience”, Journal of Monetary Economics, 39, pp. 113–141.CrossRefGoogle Scholar
  39. Rich, Georg (2000), “Monetary Policy without Central Bank Money: A Swiss Perspective”, International Finance, 3 (3), pp. 439–69.CrossRefGoogle Scholar
  40. Rich, Georg (2007), “Swiss Monetary Targeting 1974–1996: The Role of Internal Policy Analysis”, Swiss Journal of Economics and Statistics, 143 (3), pp. 283–329.CrossRefGoogle Scholar
  41. Roth, Jean-Pierre (2002), „Ist eine Notenbank für Überraschungen gut?“, speech for the Statistisch-Volkswirtschaftliche Gesellschaft Basel, Montag, 25. März 2002.Google Scholar
  42. Roth, Jean-Pierre (2003), „Geldpolitische Standortbestimmung“, speech for the Volkswirtschaftliche Gesellschaft des Kantons Bern, Montag, 17. März 2003.Google Scholar
  43. Roth, Jean-Pierre (2006), „Geldpolitik 2000–2005: Was haben wir gelernt?“, speech at the Universität St. Gallen, 18. Januar 2006.Google Scholar
  44. Roth, Jean-Pierre (2007), «Stratégie de politique monétaire— Expériences récentes en Suisse», Séminaire de théorie et politique monétaires, speech at the Université de Fribourg, 28 novembre 2007.Google Scholar
  45. Ruoss, Eveline and Marcel Savioz (2002), “How Accurate are GDP Forecasts? An Empirical Study for Switzerland”, Swiss National Bank Quarterly Bulletin, 3, pp. 42–63.Google Scholar
  46. Savioz, Marcel R. and Maja Ganarin (2010), “The Performance of SNB Inflation Forecasts from 2000 to 2009— A Proposal to Evaluate Conditional Inflation Forecasts. Comments on ‘Swiss Monetary Policy 2000–2009’ by Hans Genberg and Stefan Gerlach”, Swiss Journal of Economics and Statistics, 146, 1, pp. 167–183.CrossRefGoogle Scholar
  47. Schlegel, Martin (2009), “Implementation of Monetary Policy and the Money Market”, Dissertation, Universität Basel.Google Scholar
  48. Svensson, Lars E.O. (1999), “Inflation Targeting as a Monetary Policy Rule”, Journal of Monetary Economics, 43, pp. 607–654.CrossRefGoogle Scholar
  49. Svensson, Lars E.O. (2000), “Open-Economy Inflation Targeting”, Journal of International Economics, 50, pp. 155–183.CrossRefGoogle Scholar
  50. Svensson, Lars E.O. (2006), “Optimal inflation Targeting: Further Developments of Inflation Targeting”, Banco Central de Chile Documentos de Trabajo No 403, Diciembre.Google Scholar
  51. Taylor, John B. (1993), “Discretion versus Policy Rules in Practice”, Carnegie-Rochester Conference Series on public Policy, 39, pp. 195–214.CrossRefGoogle Scholar
  52. Truman, Edwin M. (2003), Inflation Targeting in the World Economy, Institute for International Economics, Washington, DC.Google Scholar
  53. Woodford, Michael (2003), Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton: Princeton University Press.Google Scholar

Copyright information

© Swiss Society of Economics and Statistics 2010

Authors and Affiliations

  • Thomas J. Jordan
  • Michel Peytrignet
  • Enzo Rossi
    • 1
  1. 1.ZurichSwitzerland

Personalised recommendations