Though the current liquidity levels in the Swiss franc money market are still extremely high, and interest rates are fluctuating around zero, conditions on the money markets have slowly started to normalize and extremely negative rates have disappeared. This is reflected in the recent increase of the three-month Libor, which can be ascribed to a normalisation of the rate’s risk premium and should therefore not be seen as a change in monetary policy. Though few loans are currently being concluded on the interbank market, the Libor remains an important benchmark for many credit transactions in the economy. Concluding remarks The period of low interest rates in which we live is the outcome of cyclical and secular circumstances which are unlikely to last forever. Even if we accept the “savings glut” hypothesis, the demographical and regional factors to which it refers could soon lose relevance. While the call for deleveraging should prompt increased savings in advanced economies, the demographic forces in the west are likely to have an opposite effect on the supply of savings. Similarly, the maturing of emerging markets in the east should lead to smaller current account surpluses and to a gradual reduction in the build-up of precautionary reserves by public authorities. It is also clear that the increased risk appetite associated with the “Great Moderation” was, at least to some extent, based on over-optimistic assumptions.
The unemployment rate has decreased close to its record lows, while the number of vacant jobs has approached its record high. To fill the new jobs, we need either an inflow of labour migrants, or a redistribution of the current labour force among regions, industries, and enterprises. This process is objectively slower than the return of the available labour force to work during the period of the recovery growth. A higher competition for specialists between employers is promoting the conditions for an increase in wages. It is essential that a rise in wages is consistent with the growth of labour productivity in the relevant sectors. Otherwise, it will entail higher costs which enterprises will pass on to consumers, and the rise in nominal wages will be ultimately absorbed by inflation. We keep our GDP forecast unchanged for the next year and further on. An additional tightening of monetary policy aimed at returning inflation to the target is coherent with the positive contribution of external demand and investments from the National Wealth Fund made to aggregate demand. GDP will increase by 4–4.5% this year and by 2–3% further on, which is in line with the sustainable growth path. Monetary conditions have changed only slightly after the September meeting. An increase in market rates following the rise in the key rate currently has only a limited effect on them. This is largely associated with the impact of higher inflation expectations.