Realism and flexibility do not contradict our clear task of ensuring price stability over the medium term. On the one hand, our price stability range is set comparatively low and forms an anchor for low inflation expectations. On the other hand, we have repeatedly proved that we are prepared to act decisively if price stability is at threat. The preference for low inflation and the Swiss franc’s role as a safe haven could see the SNB policy rate reaching the effective lower bound again in future. Unconventional monetary policy instruments are thus likely to continue to have an important part to play in Switzerland going forward. Even a somewhat higher level of interest rates worldwide is unlikely to change this. Our definition of price stability has proved its worth for Switzerland as a small open economy with an internationally important currency. However, the definition that is best suited to the successful pursuit of monetary policy will vary from country to country. Besides the definition of price stability, effective monetary policy over the long term also hinges on a narrow central bank mandate. IV. Do not overburden the mandate In recent years, some in politics and among the public have time and again looked to central banks with regard to issues that go beyond the core task of monetary policy, namely price stability. Central banks have come under pressure to interpret their mandate more broadly and take on new tasks.
Our definition of price stability is particularly beneficial for a small, open country such as Switzerland that is exposed to strong external shocks. Other approaches would have often required more drastic and disproportionate monetary policy responses in recent years. Given the openness of our economy, fine-tuning inflation is unrealistic. Our strategy has thus also made a significant contribution to the credibility of our monetary policy. The SNB’s mandate is clearly focused and should remain so, regardless of important societal problems such as climate change and the financing of pension provision. A narrow mandate allows a central bank to concentrate on the essential task of ensuring price stability, but is also of fundamental importance in safeguarding its independence. Independence seeks to achieve and requires distance from politics. This distance is therefore not something to be given up lightly. Page 12/16  Chart 1  Chart 2  Page 13/16  Chart 3  Chart 4  Page 14/16  Chart 5  Chart 6  Page 15/16  Chart 7  Chart 8  Page 16/16