Banks can satisfy some of their demand for liquidity by participating in these auctions. As the participating banks are then no longer as dependent on the secured interbank market for obtaining the desired amount of liquidity, aggregate demand for overnight liquidity in the repo market falls, thereby reducing upward pressures on SARON. We also wish to note that, over time, liquidity can be redistributed between banks via other channels than just the repo market. For instance, liquidity redistribution may take place via the transfer of customer deposits and longer-term deposits between banks. Naturally, such adjustment processes take some time. Let me summarise the key points we have made so far. The steering of short-term money market rates continues to work – even in negative territory. Three interest rates play a key role  Page 10/13  here. The SNB policy rate is used to communicate the monetary policy decision and, in particular, the desired stance of monetary policy. The negative interest rate on sight deposits that commercial banks hold at the SNB is the main instrument with which the SNB implements monetary policy on the money market. The exemption thresholds allow the burden on the banking system to be reduced without jeopardising the SNB’s ability to keep secured short-term money market rates, in particular SARON, close to its policy rate. As you can see, the SNB has the instruments needed to steer money market interest rates, including during times when these interest rates are in negative territory.
The fall in prices for imported consumer goods was unexpectedly sharp. It is uncertain whether this price fall was due to abnormal seasonal patterns or a decline in underlying inflation. The fall in prices may be related to an unusually warm winter, which has made it more difficult to sell winter clothing and sports equipment at ordinary prices. On the other hand, there are indications that prices for imported consumer goods in foreign currency may have fallen somewhat more than previously assumed. The wide variations in prices for some imported consumer goods, especially clothing and footwear, may lead to wide monthly variations in consumer price figures. Excluding changes in prices for clothing and footwear, the year-on-year rise in the CPI-ATE in March was 1.2 per cent, down from 1.3 per cent in February. Changes in indirect taxes, and particularly in VAT rates, have made it more difficult to interpret the price figures for the beginning of the year. The low level of inflation may be partly due to a lag in price adjustments following the indirect tax changes. Among the companies in our regional network, the share expecting a sharper rise in selling prices in the coming year is larger than the share expecting a slower rise in prices. TNS Gallup’s business sentiment survey conveys a more neutral impression. Nevertheless, both surveys indicate expectations of a sharper rise in prices in the service sector. The other Nordic countries have also experienced falling inflation.