Limit the build-up of debt despite the need to stimulate the economy I would also like to say something about the interplay between current monetary policy and measures to mitigate the risk factors I have mentioned. Is it really justified to introduce measures that may dampen household consumption or activity on the housing market when the Riksbank is at the same time trying to stimulate the economy in order to increase  3  Several studies based on household data from the financial crisis of recent years show that highly-indebted households reduced their consumption more than households with low debts (see for example Dynan 2012, Mian et al. 2013, and Andersen et al. 2014). Studies that compare developments in different countries also indicate that high or growing indebtedness in the household sector entails higher risks to the real economy, even if the households also have substantial assets (see for example IMF 2012, Jorda et al. 2013, and Flodén 2014). 4  See Riksbank (2014b). 2  BIS central bankers’ speeches  inflation? This question is particularly relevant given that the repo rate is at zero and cannot be cut much more. I think that the question, at least in principle, should nevertheless be answered in the affirmative. It must be possible to meet financial risks with targeted measures even if this makes it more difficult for monetary policy to attain the inflation target.
In periods of zero interest rates, such purchases help to counter the risk of deflation. The Swiss economy faces an exceptionally difficult year in 2009. Economic activity is set to pick up again gradually over the course of 2010, thanks to the extremely expansive monetary policy. This is, however, conditional upon an economic recovery by our main trading partners, as well as a return to stability on financial markets. The SNB measures are also aimed at reducing the risk of deflation in Switzerland. Despite the creation of massive amounts of liquidity, the SNB remains committed to ensuring price stability in the future. We will use all means at our disposal to reduce liquidity again in good time, so as to prevent any upsurge of inflation in Switzerland once the crisis has ended. BIS Review 33/2009  1