In recent years, the Swiss National Bank has had to ensure price stability in very different situations. It has succeeded in doing so by focusing on its mandate and through its monetary policy strategy.

The years before the coronavirus pandemic were characterised by low inflation. The outbreak of the pandemic triggered a serious downturn in the global economy, and the Swiss franc as a safe haven once more came under strong appreciation pressure. In this phase, the SNB fulfilled its mandate by using negative interest and extensive purchases of foreign exchange to counter the threat of deflation.

After years when it had been exceptionally low, inflation suddenly returned with all its might across the world as the pandemic subsided. Supply that had been reduced by containment measures and disrupted supply chains met with demand heightened by catch-up effects. The war in Ukraine also saw energy prices shoot up, giving further impetus to inflation.

The SNB tightened its monetary policy early by international comparison. Already in the second half of 2021, it deliberately allowed the Swiss franc to appreciate by being restrained in its purchases of foreign currency. After the first quarter of 2022, the SNB refrained from foreign currency purchases, and from the middle of the year tightened its monetary policy both by raising the SNB policy rate in several steps and by selling foreign currency.

Thanks also to the early monetary policy tightening, inflation in Switzerland was at all times significantly lower than in many other countries, and has been back in the range consistent with price stability since mid-2023. Without its forward-looking monetary policy, the SNB would have had to raise its policy rate much more strongly at a later stage, with potentially negative consequences for the economy and the labour market. The successful fight against inflation also allowed the SNB to ease its monetary policy in March 2024, which at the same time supported economic activity.

Although its approach has proven its worth in a wide variety of situations, the SNB will always critically examine its own assessments, and will endeavour to identify changes in conditions as early as possible and analyse their impact. It is thus well equipped to continue ensuring price stability in Switzerland in the future.