The UK is the exception: since the mid-1990s, the country has emerged as the growth model for Europe. For Switzerland, the sluggish development in Europe is especially regrettable, as the Swiss export sector usually serves as the engine for economic recovery. All in all, Switzerland's export industry is well positioned to benefit from higher demand from abroad. Switzerland has been able to reduce its production costs per unit in the past few years, and the Swiss franc even depreciated slightly versus the euro since the launch of the single currency. As regards domestic demand, consumer sentiment remains satisfactory overall, but this should not be expected to stimulate growth decisively. While construction activity is robust, it has lost some of its momentum. Investment in equipment is still brisk, and the recent modest slowdown should not last too long. On the whole, the Swiss economy is still on its growth trajectory, but it lacks stimuli from abroad. This situation is the same as the one underlying the National Bank's interest rate decision of December 2004. Even though Switzerland is particularly affected by the lacklustre performance of the European economy, overall prospects are not gloomy. Growth in the rest of the world remains dynamic, and this is expected to benefit Europe in due course. For Switzerland, a growth rate of 1.5-2% is still realistic. With the Swiss economy thus continuing to grow below its potential, the labour market will not see any sustained improvement. BIS Review 11/2005  1
His paper "Monetary Policy Today: Sixteen Questions and About Twelve Answers" followed up on a previous assignment he discharged in the form of a key-note dinner speech in Frankfurt in 1999, at what was the first research conference organised by the then brand-new European Central Bank. What I found noticeable from Professor Blinder’s 2006 presentation was that the list of issues had grown longer rather than shorter since 1999 (from 15 to 16), although he noted that this should not be misinterpreted as lack of progress. It was the result of dropping four issues from his list – because, in his view, they were either resolved or had moved out of the radar screen – and  BIS Review 132/2007  1  adding five. Most remarkably, among the issues that had been dropped were low and stable inflation as the central goal of monetary policy, and central bank independence. I think Professor Blinder was right to remove these issues from his list. There is a broad agreement among academic economists and policy makers alike that maintaining price stability is the best contribution that monetary policy can make to support sustainable growth and job creation. This consensus reflects the fundamental tenet that, as the rational expectations literature has helped us understand 1 , there is no trade-off between growth and inflation at horizons longer than the short run, and that the real effects of monetary policy are short-lived and uncertain.