Necessary real exchange rate adjustments will have to occur via wage and price changes while the ability for fiscal policy to reduce the cost of higher unemployment is curtailed. At the same time, labor mobility that could absorb some of the costs remains limited in Europe. Arguably, therefore, far-reaching economic reforms become in fact more difficult to implement once a country loses its independent monetary and fiscal policy inside EMU. This is particularly true for countries with rigid labor markets. The recent electoral results in Germany and France illustrate this dilemma. It is of utmost importance for the Swiss political authorities not to fall into the trap of the kind of ‘help us from ourselves’ line of reasoning that I tried to outline. There may well be political reasons to have a long-term EMU accession strategy in place. But it is a mistake to link the question of domestic economic reform to EMU accession. As I pointed out earlier, in light of Switzerland’s legal, political and historical context, far-reaching reforms will be a formidable challenge, despite the extraordinary asset of a highly flexible labor market. Nonetheless, there is no alternative to tackling independently and directly the domestic economic restructuring process and its consequences if Switzerland is serious to boost its growth potential and thereby safeguard its tradition of broad social and welfare programs.
News conference  22 September 2022, 10.00 am  Introductory remarks by Thomas Jordan Ladies and gentlemen It is my pleasure to welcome you to the news conference of the Swiss National Bank. Our news conferences will now be held after every monetary policy assessment. The introductory remarks will be shorter overall. This will give us more time to take your questions afterwards. Monetary policy decision  I will begin with our monetary policy decision. We have decided to tighten our monetary policy further and to raise the SNB policy rate by 0.75 percentage points to 0.5%. In doing so, we are countering the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected. It cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term. To provide appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary. The SNB policy rate change applies from tomorrow, 23 September 2022. Moreover, we are adjusting the implementation of our monetary policy to the positive interest rate environment. This ensures that the secured short-term Swiss franc money market rates remain close to the SNB policy rate. Banks’ sight deposits held at the SNB are remunerated at the SNB policy rate up to a certain threshold. Sight deposits above this threshold are remunerated at an interest rate of zero percent. We will also use liquidity-absorbing measures.