Swiss economic outlook  I now turn to the economic outlook for Switzerland. GDP stagnated in the fourth quarter. For 2022 as a whole, GDP grew by 2.1%. The labour market remained robust, and overall production capacity has been well utilised. Page 3/6  Zurich, 23 March 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  Despite the slight upturn in economic activity in recent months, growth is likely to remain modest for the rest of the year. Subdued demand from abroad and the loss of purchasing power due to inflation are having a dampening effect. Overall, Swiss GDP is likely to increase by around 1% this year. The forecast for Switzerland, as for the global economy, is subject to high uncertainty. In the short term, the main risks are an economic downturn abroad and adverse effects of the turmoil in the global financial sector. Monetary policy outlook  Ladies and gentlemen, allow me to return to our monetary policy. Inflation is currently higher than we had expected in December, and inflationary pressure has risen again also due to second-round effects. The renewed increase in our policy rate is therefore necessary to ensure that inflation returns to the range consistent with price stability over the medium term. It cannot be ruled out that a further tightening of monetary policy will be necessary to ensure price stability.
9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  Figure 1B: Improvement in performance after adding Governance scores  Figure 1A naturally led us to ask whether there are other measures which can better anticipate problems at smaller banks and building societies. We know that the quality of governance is vitally important, so we repeated our experiment, adding PRA supervisors’ judgements about the quality of a firm’s governance. We found that adding judgements about governance reduced our false alarm rates more often – and by more – for small firms than for large. This of course doesn’t mean governance isn’t important at larger firms – the opposite is true in our view. But it does suggest that supervising governance can be even more important for small firms. Source: Bank of England and Bank calculations. Notes: Balance sheet data as of July 2007, taken from historical regulatory returns (see Sebastian J A de-Ramon, William B Francis and Kristoffer Milonas, ‘An overview of the UK banking sector since the Basel Accord: insights from a new regulatory database’, BoE Staff Working Paper No. 652 (2017)). Supervisors’ scores for Governance from historic FSA records (see Joel Suss and Henry Treitel, ‘Predicting bank distress in the UK with machine learning’, BoE Staff Working Paper No. 831 (2019)). To test the robustness of our findings to definitional choices, results are shown for two different definitions of “Large” and six different definitions of distress.