The Swiss National Bank's monetary policy concept - an example of a 'principles-based' policy framework

Ernst Baltensperger, Philipp Hildebrand and Thomas Jordan

No 2007-03, Economic Studies from Swiss National Bank

Abstract: The practice of monetary policy has evolved a great deal since the early 1990s. This evolution was significantly influenced by rapid developments in the theory of monetary policy. A new consensus about 'principles-based' monetary policy appears to be emerging. It marries a firm long-term anchor for nominal stability, rooted in the original ideas behind inflation targeting, with short-term flexibility, based on a more discretionary and pragmatic approach to monetary policy. The SNB's monetary policy framework - with a firm nominal anchor but with an emphasis on the need for flexibility - reflects, to a considerable degree, the emerging academic consensus about best-practice monetary policy. With its successful seven-year track record, it may serve as an interesting case study for a policy aiming at an intermediate position between full discretion and rigidly defined short-term inflation targeting.

Keywords: Swiss National Bank; monetary policy; inflation targeting; rules; discretion (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007
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Citations: View citations in EconPapers (10)

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