Figure 2 Commodity prices (*) (index, 2009=100) 240  240  210  210  180  180  150  150  120  120  90  90  60  60  30  30  06 Edible oils  07  08 Sugar  Meats  09 Dairy  10  11  Cereals  WTI oil  (*) Except for WTI oil, FAO indexes are used. Source: Bloomberg. 6  BIS central bankers’ speeches  Figure 3 Inflation  (annual change, percent)  CPI  Core CPI (4)  10  10 6  6  8  8  6  6  5  5  4  4  4  4  2  2  3  3  0  0  2  2  -2  -2 1  1  -4  -4 0  0  05  06  07  08  U.S.A. Emerging Asia (2)  09  10  11  05  06  07  Eurozone Emerging Europe (3)  08  09  10  11  Latin America (1)  (1) CPI anc Core CPI include: Brazil, Colombia, Mexico and Peru. (2) CPI includes China, Indonesia, Malaysia, South Korea and Thailand. Core CPI includes South Korea and Thailand. (3) CPI includes Czech Rep., Hungary, Poland and Russia. Core CPI excludes Russia. (4) Uses definition of each country. Sources: Bloomberg, CEIC Data and statitics institutes of respective countries.
Consequently, Switzerland – unlike other countries – was able to avoid introducing state-guaranteed bonds. With the drastic reduction in key rates and the subsequent decline in mortgage rates, the burden on households and companies was eased. In this way, the severity of the recession was somewhat alleviated and the risks of deflation reduced. However, the interest rate is now at a historic low and this means medium-term risks for the Swiss real estate market and financial stability. Experience shows that periods of low interest rates provide scope for excesses on the mortgage and real estate market. Consequently, in the current environment in particular, attention should be given to ensuring that past mistakes are not repeated. Caution must remain the watchword when granting loans. BIS Review 140/2009  1