Switzerland spent many years trying to make monetary targets work, in the face of recurring exchange rate pressures which led it to allow deviations from those targets; in 2000 it began to pursue its own version of inflation targeting, but this was again disrupted by exchange rate pressures which forced it to set a floor for the EUR/SwF exchange rate from late 2011 to early 2015.
|Years||Targets and attainment||Classification|
|1974||exchange rate floated late 1973, no other targets, but underlying focus on price stability; monetary policy operated through indirect instruments||loosely structured discretion LSD|
|1975-77||monetary targets (point targets for average of 12-month growth rates over year) met but monetary growth volatile; monetary policy aims to control monetary base M0 as instrument to control M1||loose monetary targeting LMT|
|1978-81||monetary targets respectively overshot, suspended, undershot and undershot, in response to appreciating exchange rate||loosely structured discretion LSD|
|1982-87||monetary targets (M0, average of 12-month growth rates) met||loose monetary targeting LMT|
|1988-90||monetary targets undershot, in context of revisions to liquidity requirements and new interbank clearing system||loosely structured discretion LSD|
|1991-95||medium-term monetary target met for 1990-94 target period (but annual growth under and over implied target 1992 and 1993, in context of exchange rate pressures); monetary growth okay 1995; policy operated largely through swap transactions in forex market to affect banks’ reserves||loose monetary targeting LMT|
|1996-9||medium-term monetary target increasingly overshot for 1995-99 target period, partial switch of focus to M3 (instead of M0) from late 1997||loosely structured discretion LSD|
|2000-2011||price stability definition rather than inflation target and focus on medium term, but definition regularly met; operational target range for 3-month SwF LIBOR, pursued via repo transactions; policy decisions forward-looking, forecast-based; some improvements in transparency and central bank independence; 2009-11 rising concern with recurring appreciation pressures despite large forex purchases leads to announcement September 2011 of floor for EUR/SwF exchange rate||loose inflation targeting LIT|
|2012-14||continuing concern with possibility of deflation, and small net deflation on average in 2012 and 2013 (as against 0-2% price stability definition), together with continuing exchange rate floor (one-sided exchange rate target); medium term inflation expectations still anchored (according to SNB’s Quarterly Bulletin)||inflation with exchange rate targeting IwERT|
|2015-17||exchange rate floor abandoned early 2015 in response to renewed capital inflows (and massively expanded central bank balance sheet); price stability definition well undershot 2015 but medium term inflation expectations remain anchored; lower deflation 2016, low positive inflation 2017||loose inflation targeting LIT|
Selected IMF references: EDI 1994 ch IV especially Annex I; RED 1995 pp18-26; RED 1996 pp9-10; SISA 1999 pp23-9; SR 2000 pp15-17; SI 2001 pp31-5; SR2002 p13; SR 2009 pp24-7; SR 2010 pp12-16; SR 2011 pp10-14; SI 2012; SR 2013 pp13-15; SR 2014 pp5, 9-11; SR 2015 pp4, 17-18; SR 2016, pp6-9.
Additional sources: Laubach and Posen (1997); Rich (1997, 2000); Baltensperger et al. (2007).
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