CPIF close to 2 per cent at the end of the forecast period With regard to inflation measured in terms of the consumer price index, CPI, future developments will be affected by the rise in interest rates, or rather by the increase in households’ mortgage interest expenditure. This is clearly visible if one looks at the same time at CPIF inflation, which quite simply is CPI inflation with a fixed mortgage rate. The CPIF is thus not directly affected by changes in mortgage rates, which means that these measures differ quite considerably over the coming years, although they approach one another further ahead. Both CPI and CPIF inflation rose in the months prior to the publication of the Monetary Policy Report (Figure 9). This was mainly due to rising energy prices, but also to weak productivity growth and to the previous year’s weaker exchange rate having a delayed impact. However, data published two weeks ago show that both the CPI and the CPIF fell in January. During 2010 CPIF inflation is expected to fall, primarily as a result of companies’ costs falling and the krona strengthening, which is expected to make imports cheaper. The rate of increase in the CPIF will rise from 2012 and onwards as economic activity improves and companies’ costs begin to rise again. At the end of the forecast period, we expect inflation measured in terms of the CPIF to be close to 2 per cent. However, CPI inflation is expected to continue to rise.
With a view to managing such a crisis scenario, Credit Suisse as well as UBS have increased their gone-concern loss-absorbing capacity by issuing further bail-in instruments, which can be converted into equity in the event of impending insolvency. As we explained in our Financial Stability Report published in June, since the ‘too big to fail’ regulations came into force, 1 Final requirements refer to the requirements that will apply after expiry of all transitional provisions, and in particular to the qualitative requirements for going-concern capital. Page 1/3  Berne, 14 December 2017 Fritz Zurbrügg  News conference  Credit Suisse and UBS have also taken important organisational steps to improve their resolvability. Despite these positive developments, the two big banks still need to make further progress if they are to fully comply with the second-pillar requirements. This applies both to their gone-concern loss-absorbing capacity and their resolution planning. Full compliance with all of the ‘too big to fail’ requirements will further strengthen the big banks’ going and gone-concern loss-absorbing capacity as well as improve their resolvability in a crisis. Both of these sets of requirements must be addressed if Switzerland’s ‘too big to fail’ problem is to be solved. Domestically focused banks  I would now like to turn to the domestically focused banks. These institutions’ biggest risks continue to stem from the mortgage and real estate markets. I will make three points in this regard. First, imbalances on the mortgage and real estate markets persist.