Chart 8). We do not have similar surveys of households, but it is safe to assume that they would likely favour even lower inflation. The public reaction to the recent rise in inflation clearly demonstrates that there would be little understanding among the general population for a higher targeted rate of inflation. A second possible adjustment would be to target an average inflation rate over a given period. Overshooting and undershooting inflation rates would have to be compensated for over time. This could better stabilise longer-term inflation expectations in that the aim would be a steady development in the level of prices. Why do we not compensate for past deviations from price stability? The Swiss economy has proven in the past that it can deal well with temporary inflation shocks, and that longer-term inflation expectations are well anchored. Compensating for past deviations from a targeted average value would only be possible with massive additional volatility in prices and output, especially given the strong global shocks to which Switzerland is exposed. Such an approach would also find little acceptance among the general public. The third possible adjustment relates to the choice of a point target instead of a range when defining price stability. This could help anchor inflation expectations more precisely and thus better stabilise inflation. Why do we refrain from adopting a point target? Having such a precise goal would unnecessarily complicate monetary policy implementation for the SNB.
The behaviour of prices in the euro area is also a cause for concern. Against a fragile macroeconomic background, as at present, very low inflation rates entail a danger that consumer and business expectations will stand excessively below the ECB’s medium- term price stability objective of 2% for the euro area as a whole. Contrary to the downside risks surrounding the growth projections for the international economy as a whole, those for inflation are more mixed and have given rise to different responses by various central banks. The US Federal Reserve and the Bank of England have begun to withdraw some of the exceptionally expansionary non-conventional measures they introduced at the height of the crisis. Conversely, the European Central Bank has gone in the opposite direction, deepening the expansionary stance of its monetary policy. The euro area monetary policy stance has taken the form of a series of measures adopted, in the main, at the June and September meetings of the ECB Governing Council, where conventional action has been combined with other exceptional and non-conventional measures. Among the conventional measures, official interest rates have once again been cut. The main refinancing operations rate currently stands at an all-time historical and technical low of 0.05%. The deposit facility rate moved into negative territory in June and was further lowered in September to –0.20%, thus increasing the cost for banks of holding immobilised surplus liquid balances in their accounts with the Eurosystem.