Quarterly Bulletin 1 / 2023 March
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Quarterly Bulletin 1 / 2023 March
Quarterly Bulletin 1 / 2023 March Volume 41
Contents
Page
Monetary policy report 4
1 Monetary policy decision of 23 March 2023 6
Monetary policy strategy at the SNB 7
2 Global economic environment 8
3 Economic developments in Switzerland 14
4 Prices and inflation expectations 19
5 Monetary developments 22
Business cycle signals 28
Chronicle of monetary events 36
Glossary 38
Quarterly Bulletin 1 / 2023 March 3Monetary policy report
Report for the attention of the Governing Board of the Swiss
National Bank for its quarterly assessment of March 2023
The report describes economic and monetary developments in
Switzerland and explains the inflation forecast. It shows how the
SNB views the economic situation and the implications for
monetary policy it draws from this assessment. The first section
(‘Monetary policy decision of 23 March 2023’) is an excerpt from
the press release published following the assessment.
This report is based on the data and information available as at
23 March 2023. Unless otherwise stated, all rates of change from
the previous period are based on seasonally adjusted data and
are annualised.
Quarterly Bulletin 1 / 2023 MarchKey points
• O
n 23 March 2023, the SNB decided to further tighten
its monetary policy. It raised the SNB policy rate by
0.5 percentage points to 1.5% to counter the renewed
increase in inflationary pressure. The conditional inflation
forecast was above that of December over the medium
term, and would have been even higher without the rise
in the SNB policy rate.
• O
n 19 March, the SNB announced it would provide
substantial liquidity assistance to support the takeover of
Credit Suisse by UBS. In so doing, the SNB performs its
statutory task to contribute to the stability of the financial
system.
• G
lobal growth momentum and the outlook for the coming
quarters remain subdued. Inflation has declined somewhat
due to lower energy prices, but is still clearly above central
banks’ targets in many countries. Accordingly, numerous
central banks have further tightened their monetary policy.
Inflation is likely to remain elevated for the time being.
• A
fter a favourable development at the beginning of the year,
economic growth is likely to remain modest in Switzerland,
too. For this year, the SNB anticipates GDP growth of
around 1%. The level of uncertainty associated with the
forecast is still high, due also to the turmoil in the global
financial sector.
• A
nnual CPI inflation rose back to the level recorded last
summer, and at 3.4% in February was still significantly
above the range consistent with price stability. The short-
term inflation expectations derived from surveys remained
elevated. The longer-term inflation expectations were still
within the range consistent with price stability.
• T
here was little change in the external value of the Swiss
franc, but bond yields and equity prices fluctuated strongly.
The increase in real estate prices was less pronounced
than in the previous quarter. Most monetary aggregates
contracted, whereas lending growth remained robust.
Quarterly Bulletin 1 / 2023 March 51 Inflation has risen again since the beginning of the year,
and stood at 3.4% in February. It is therefore still clearly
Monetary policy decision above the range the SNB equates with price stability.
The latest rise in inflation is principally due to higher prices
of 23 March 2023 for electricity, tourism services and food. However, price
increases are now broad-based.
The SNB’s new conditional inflation forecast is based
on the assumption that the SNB policy rate is 1.5% over
the entire forecast horizon (cf. chart 1.1). Stronger second-
round effects and the fact that inflationary pressure from
Swiss National Bank tightens monetary policy further abroad has increased again mean that, despite the raising
and raises SNB policy rate to 1.5% of the SNB policy rate, the new forecast is higher through
The SNB is tightening its monetary policy further and is to mid-2025 than in December. The new forecast puts
raising the SNB policy rate by 0.5 percentage points to average annual inflation at 2.6% for 2023, and 2.0% for
1.5%. In doing so, it is countering the renewed increase in 2024 and 2025 (cf. table 1.1). At the end of the forecast
inflationary pressure. It cannot be ruled out that additional horizon, inflation stands at 2.1%. Without today’s policy
rises in the SNB policy rate will be necessary to ensure rate increase, the inflation forecast would be even higher
price stability over the medium term. To provide appropriate over the medium term.
monetary conditions, the SNB also remains willing to be
active in the foreign exchange market as necessary. For The global economy hardly grew in the fourth quarter of
some quarters now, the focus has been on selling foreign 2022, while in many countries inflation remained clearly
currency. above central banks’ targets. Against this background,
numerous central banks have tightened their monetary
The SNB policy rate change applies from 24 March 2023. policy further.
Banks’ sight deposits held at the SNB will be remunerated
at the SNB policy rate of 1.5% up to a certain threshold. The growth outlook for the global economy in the coming
Sight deposits above this threshold will be remunerated quarters remains subdued. At the same time, inflation is
at an interest rate of 1.0%, and thus still at a discount of likely to remain elevated worldwide for the time being.
0.5 percentage points relative to the SNB policy rate. Over the medium term, however, it should return to more
moderate levels, not least thanks to monetary policy and
The past week has been marked by the events surrounding due to the economic slowdown. This scenario for the
Credit Suisse. The measures announced on the weekend global economy is subject to significant risks, in particular
of 18/19 March by the federal government, FINMA and the due to the recent turmoil in the global financial sector.
SNB have put a halt to the crisis. The SNB is providing
large amounts of liquidity assistance in Swiss francs and
foreign currencies. These loans are secured and subject to
interest.
Chart 1.1
����������� ��������� �������� �� ����� ����
Year-on-year change in Swiss consumer price index in percent
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
– 0.5
– 1.0
– 1.5
2019 2020 2021 2022 2023 2024 2025
Inflation Forecast March 2023, Forecast December 2022,
SNB policy rate 1.5% SNB policy rate 1.0%
Source(s): SFSO, SNB
6 Quarterly Bulletin 1 / 2023 MarchSwiss GDP stagnated in the fourth quarter of 2022. a low level, and the utilisation of production capacity is
The services sector lost momentum, and value added in likely to decline slightly.
manufacturing declined slightly again. For 2022 as a
whole, GDP grew by 2.1%. The labour market remained The forecast for Switzerland, as for the global economy,
robust, and overall production capacity has been well is subject to high uncertainty. In the short term, the main
utilised. risks are an economic downturn abroad and adverse effects
of the turmoil in the global financial sector.
Despite the slight upturn in economic activity in the first
months of 2023, growth is likely to remain modest for Mortgage growth has remained largely stable in recent
the rest of the year. The subdued demand from abroad and months, whereas there are signs of a slowdown in
the loss of purchasing power due to inflation are having residential real estate prices. The vulnerabilities on the
a dampening effect. Overall, GDP is likely to increase mortgage and real estate markets persist.
by around 1% this year. Unemployment should remain at
Monetary policy strategy at the SNB
The SNB has a statutory mandate to ensure price element in implementing its monetary policy the SNB
stability while taking due account of economic sets the SNB policy rate, and seeks to keep the secured
developments. short-term Swiss franc money market rates close to
this rate. If necessary, the SNB may also use additional
The SNB has specified the way in which it exercises this monetary policy measures to influence the exchange
mandate in a three-part monetary policy strategy. First, rate or the interest rate level.
it regards prices as stable when the Swiss consumer
price index (CPI) rises by less than 2% per annum. This The SNB comprehensively reviewed its monetary policy
allows it to take account of the fact that the CPI slightly strategy in 2022 and concluded that it has fundamentally
overstates actual inflation. In addition, the SNB allows proved its worth. There was no need to adjust the
inflation to fluctuate somewhat with the economic definition of price stability and the conditional inflation
cycle. Second, the SNB summarises its assessment forecast elements. The formulation of how the SNB
of inflationary pressure and of the need for monetary implements monetary policy by setting the SNB policy
policy action in a quarterly inflation forecast. This rate was adjusted to take into account the increased
forecast, which is based on the assumption of a constant importance of foreign exchange market interventions
SNB policy rate, shows how the SNB expects the CPI to and other monetary policy measures (cf. also the SNB’s
move over the next three years. As the third Annual Report 2022, chapter 1.1).
Table 1.1
OBSERVED INFLATION IN MARCH 2023
2019 2020 2021 2022 2020 2021 2022
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Inflation 0.6 0.6 0.3 −0.1 −0.1 −1.2 −0.9 −0.7 −0.4 0.5 0.8 1.4 2.1 3.0 3.4 2.9 −0.7 0.6 2.8
Source(s): SFSO
CONDITIONAL INFLATION FORECAST OF MARCH 2023
2022 2023 2024 2025 2023 2024 2025
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Forecast December 2022,
SNB policy rate 1.0% 3.0 3.0 2.5 2.2 2.0 1.9 1.8 1.8 1.8 1.9 2.0 2.1 2.4 1.8
Forecast March 2023,
SNB policy rate 1.5% 3.2 2.7 2.4 2.3 2.1 2.0 2.0 2.0 2.0 2.0 2.1 2.1 2.6 2.0 2.0
Source(s): SNB
Quarterly Bulletin 1 / 2023 March 7Chart 2.1 2
����� ���� �����
Average of depicted period = 100
Global economic
Index environment
120
115
110
105
100
95
The global economy hardly grew in the fourth quarter of
90
2022. Economic development was curbed in particular
85
by the gas scarcity in Europe and a strong pandemic wave
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
in China. The weakened economic activity was reflected
World Advanced economies in a noticeable decrease in global trade in the fourth
Emerging economies quarter (cf. chart 2.1). Nevertheless, Q4 2022 and Q1 2023
Source(s): CPB Netherlands Bureau for Economic Policy Analysis, Refinitiv will likely be slightly less weak overall than expected
Datastream
in December. In many countries, inflation remains clearly
above central banks’ targets. Against this background,
numerous central banks have tightened their monetary
policy further.
The global growth outlook for the coming quarters
remains subdued, this being attributable to the still scarce
availability of natural gas in Europe, the loss of purchasing
power due to inflation, and tighter monetary policy.
Inflation is likely to remain elevated for the time being, but
should return to more moderate levels over the medium
term, not least thanks to monetary policy and due to the
economic slowdown.
This scenario for the global economy is subject to
significant risks, in particular owing to the recent turmoil
in the global financial sector.
The SNB’s forecasts for the global economy are based on
assumptions about oil prices and the EUR/USD exchange
rate. The SNB is assuming an oil price for Brent crude
of USD 85 per barrel, compared with USD 94 in the last
baseline scenario, and an exchange rate of USD 1.08 to the
Table 2.1
BASELINE SCENARIO FOR GLOBAL ECONOMIC DEVELOPMENTS
Scenario
2019 2020 2021 2022 2023 2024
GDP, year-on-year change in percent
Global 1 2.8 −3.0 6.2 3.4 3.3 2.9
US 2.3 −2.8 5.9 2.1 1.2 0.7
Euro area 1.6 −6.3 5.3 3.5 0.7 0.8
Japan −0.4 −4.3 2.2 1.0 1.0 0.9
China 6.0 2.2 8.4 3.0 5.8 4.9
Oil price in USD per barrel 64.3 41.8 70.7 100.9 84.7 85.0
1 World aggregate as defined by the IMF, PPP-weighted.
Source(s): Refinitiv Datastream, SNB
8 Quarterly Bulletin 1 / 2023 Marcheuro compared with USD 1.01 previously. Both correspond Chart 2.2
to the 20-day average when the current baseline scenario
������������� ����-���� �������� �����
was drawn up.
10-year government instruments
INTERNATIONAL FINANCIAL AND COMMODITY %
MARKETS 5
4
Since the last monetary policy assessment in December,
inflation developments have continued to dominate events 3
in international financial markets. Against this background, 2
many central banks tightened their monetary policy
further. The collapse of Silicon Valley Bank in the US 1
led to turmoil in the international financial sector from
0
mid-March, weighing on financial market sentiment and,
in particular, also dampening interest rate expectations in –1
the advanced economies. 2019 2020 2021 2022 2023
US Japan Germany
Yields on ten-year government bonds in advanced
Source(s): Refinitiv Datastream
economies fluctuated considerably in the period under
review. Initially, markets were of the opinion that inflation
may have peaked. At the same time, there were growing
Chart 2.3
signs of an economic downturn. Yields subsequently
declined. Meanwhile, on the back of unexpectedly robust �������� ����-���� �������� �����
economic data and persistent inflation, yields temporarily 10-year government instruments
increased again significantly from mid-January. The recent
%
turmoil in the international financial sector following
5
the events surrounding Silicon Valley Bank abruptly curbed
these yields, however (cf. charts 2.2 and 2.3). 4
3
Although global stock markets initially continued to
2
recover slightly, supported mainly by a decline in recession
fears and by the post-pandemic reopening of the Chinese 1
economy, they subsequently relinquished most of their 0
gains from mid-March due to the turmoil in the financial
sector. Uncertainty about further price movements thus –1
rose again latterly, as indicated, for instance, by the VIX, 2019 2020 2021 2022 2023
the index for the implied volatility of stocks in the US as Germany France Italy
measured by options prices (cf. chart 2.4). Spain Portugal UK
Source(s): Refinitiv Datastream
Movements in the foreign exchange market continued
to reflect monetary policy expectations. The US dollar
and pound sterling fluctuated substantially and, in trade- Chart 2.4
weighted terms, were recently back near their mid-December
levels. Expectations of a stronger tightening of monetary ����� �������
policy in the euro area contributed to the euro’s slight
Index %
trade-weighted appreciation. The yen also strengthened
180 100
somewhat after the Bank of Japan unexpectedly expanded
the target range for yields on Japanese government bonds, 160 80
and because it has recently been more sought after as a
safe haven (cf. chart 2.5). 140 60
Commodity prices declined overall. The price of Brent 120 40
crude initially fluctuated within a narrow range around
USD 83 per barrel, but decreased significantly from 100 20
mid-March, to around USD 77 latterly (cf. chart 2.6).
80 0
2019 2020 2021 2022 2023
MSCI World (lhs; beginning of period = 100)
Implied volatility (VIX) (rhs)
Source(s): Refinitiv Datastream
Quarterly Bulletin 1 / 2023 March 9Chart 2.5 UNITED STATES
�������� ����� Driven mainly by private consumption and a stronger
Trade-weighted
increase in inventories, GDP in the US expanded by 2.7%
Index, beginning of period = 100 in the fourth quarter of 2022 (cf. chart 2.7). Investment,
115 by contrast, saw a renewed decline. For 2022 as a whole,
110 GDP growth amounted to 2.1% (cf. table 2.1).
105
100
The labour market remained very well utilised. Employment
figures rose once again at an above-average rate, and
95
unemployment was close to its historic low, at 3.6% in
90
February (cf. chart 2.9).
85
80 Key economic indicators (such as private consumption
75 and employment) point to a sound development in
2019 2020 2021 2022 2023 economic activity at the beginning of the year. Nevertheless,
growth momentum is likely to slow markedly over
USD JPY EUR GBP
the course of the year, primarily because the high level
Source(s): Refinitiv Datastream
of inflation is weighing on real incomes and consumption.
Added to this are the dampening effects of a tighter
monetary policy and a less expansionary fiscal policy.
Chart 2.6
However, in view of the recent sound development,
�������� ������ the SNB is raising its 2023 growth forecast compared to
December, to 1.2%. For 2024, it expects GDP growth
Index, beginning of period = 100 USD/barrel of 0.7% (cf. table 2.1).
240 160
220 140 Consumer price inflation receded further in recent months
200 120 and stood at 6.0% in February (cf. chart 2.10). This primarily
180 100 reflected a decline in energy inflation. Core inflation,
160 80 by contrast, weakened only slightly to 5.5% (cf. chart 2.11).
140 60
Inflation as measured by the personal consumption
expenditure deflator – the index used by the US Federal
120 40
Reserve to set its 2% inflation target – amounted to
100 20
5.4% in January, thus remaining significantly above the
80 0 Fed’s target.
2019 2020 2021 2022 2023
Commodities Industrial metals Against the background of high inflation and tight labour
Oil: Brent (rhs) market conditions, the Fed increased its target range
Source(s): Refinitiv Datastream for the federal funds rate by 25 basis points in February,
and – despite the recent turmoil in the financial sector –
by another 25 basis points in March, to stand latterly at
Chart 2.7 4.75 – 5.0% (cf. chart 2.12). The Fed emphasised that some
additional monetary policy tightening might be
���� �� appropriate.
Index, Q4 2019 = 100
Following the collapse of Silicon Valley Bank in March,
115
the Fed created a new credit facility (Bank Term Funding
110 Program) to secure liquidity in the banking sector. In
addition, the Federal Deposit Insurance Corporation and
105 the Department of the Treasury expanded deposit insurance
100
coverage at two affected banks.
95
90
85
2019 2020 2021 2022 2023
US Japan Euro area China
Source(s): Refinitiv Datastream
10 Quarterly Bulletin 1 / 2023 MarchEURO AREA Chart 2.8
���������� ��������’ �������
In the euro area, GDP stagnated in the fourth quarter (�������������)
(cf. chart 2.7). With the high level of inflation weighing
on demand, activity in the services sector declined overall. Index
In manufacturing, value added registered only a slight 65
increase. The downturn in energy-intensive industries due 60
to high gas prices was especially significant. Meanwhile,
55
some industries benefited from decreasing supply
bottlenecks. GDP growth for 2022 amounted to 3.5% 50
(cf. table 2.1). 45
40
Labour market developments continued to be positive.
35
Employment figures climbed again, while unemployment,
at 6.7% in January, remained close to its all-time low 30
(cf. chart 2.9). 2019 2020 2021 2022 2023
US Japan Euro area China
On the whole, economic activity developed somewhat
Source(s): Institute for Supply Management (ISM), S&P Global
better in recent months than expected in December.
Nevertheless, the growth outlook remains muted. In
particular, households’ loss of purchasing power due to
Chart 2.9
inflation, tighter financing conditions for companies, as
well as elevated gas prices, which are pushing up production ������������ �����
costs and thus weighing on output, are having a dampening
effect. Economic expansion is thus likely to be slow in %
the coming quarters. Owing to the somewhat more positive 16
development of late, however, the SNB is revising its 14
forecast upwards for this year. It now expects GDP growth
12
of 0.7% for 2023 and 0.8% for 2024 (cf. table 2.1).
10
Consumer price inflation fell substantially in recent 8
months but, at 8.5% in February, it continued to exceed the
ECB target (cf. chart 2.10). The decline in energy prices 6
played a key role. Meanwhile, core inflation continued to 4
climb and latterly stood at 5.6% (cf. chart 2.11). The increase
2
reflected higher prices for both services and various goods,
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
due in part to high energy costs in the past year.
US Japan Euro area
The ECB raised its key interest rates by 50 basis points Source(s): Refinitiv Datastream
in February, and again in March. The relevant interest rate
in the money market – the deposit facility rate – thus
latterly stood at 3.0% (cf. chart 2.12). Given the high level Chart 2.10
of uncertainty, the ECB said it would base future policy
rate decisions on incoming economic and financial data, �������� ������
the dynamics of underlying inflation, and the strength of Year-on-year change
monetary policy transmission. In March, it began as %
planned to only partially reinvest maturing securities 12
under its asset purchase programme (APP). The APP 10
portfolio will decline by EUR 15 billion per month on
average until mid-year; it will subsequently be reduced 8
further. 6
4
2
0
–2
2019 2020 2021 2022 2023
US Japan Euro area China
Source(s): Refinitiv Datastream
Quarterly Bulletin 1 / 2023 March 11Chart 2.11 JAPAN
���� ��������� �����
Having exhibited volatile growth in the previous quarters,
Year-on-year change
Japan’s GDP stagnated in the fourth quarter (cf. chart 2.7).
% Private consumption recovered somewhat from the effects
8 of the coronavirus wave during the summer months,
and exports of services benefited from the gradual return
6
of inbound tourism. Goods and services exports and
4 manufacturing, by contrast, lost momentum as a result
of weak demand from China. For the year as a whole, GDP
2 expanded by 1.0% (cf. table 2.1). The economic recovery
0
thus continued at a moderate pace.
–2 Overall, employment figures increased again slightly
2019 2020 2021 2022 2023 in recent months, while the unemployment rate was back
US Japan Euro area China
near its pre-pandemic level, at 2.4% in January
(cf. chart 2.9).
1 Excluding food and energy.
Source(s): Refinitiv Datastream
In view of the emerging global economic slowdown,
Japan’s growth prospects continue to be modest.
Nevertheless, a number of factors will likely support
Chart 2.12
future growth. These include catch-up effects in private
�������� �������� ����� consumption and tourism, a pick-up in demand from
China, and an easing of procurement problems in the
% automotive industry. Added to this are stimulus measures,
5 such as an energy subsidy aimed at reducing the burden
4 on households this year. Overall, the economic outlook
3 has not changed significantly. As a result of data revisions,
however, the growth forecast for this year is somewhat
2
lower, at 1.0%. For 2024, the SNB expects growth
1
of 0.9%, thus still slightly above potential (cf. table 2.1).
0
–1 Influenced by the weak yen and the associated higher
2019 2020 2021 2022 2023 import prices, consumer price inflation increased further.
It has been above the Bank of Japan’s target since April
US 1 Japan 2
Euro area 3 China 4
of last year and, in January, stood at 4.3% (cf. chart 2.10),
the highest it has been since the early 1980s. Inflation
1 Federal funds rate (upper limit of target range). 2 Call money target rate.
3 Deposit facility rate. 4 Reverse repo rate (7-day). continued to be largely driven by energy and food prices.
Source(s): Refinitiv Datastream Core inflation also advanced, latterly to 2.0% (cf. chart 2.11).
The Bank of Japan considers the inflation trend resulting
from higher import prices to be temporary and expects
inflation to return to below 2% in the 2023 fiscal year,
which begins in April. Against this backdrop, it left its
targets under the yield curve control programme unchanged.
However, it decided last December that it would
allow long-term bond yields to fluctuate in a wider band.
12 Quarterly Bulletin 1 / 2023 MarchCHINA real estate market is expected to still weigh somewhat on
economic activity. In March, the government announced
GDP in China stagnated in the fourth quarter (cf. chart 2.7). that it intends to focus on stable economic and employment
Growth was largely held back by a renewed coronavirus growth, and is aiming for GDP expansion of around 5% for
wave and the abrupt exit from the country’s zero-COVID this year. In light of the rapid reopening of the economy,
policy, which resulted in a substantial rise in the number the SNB is raising its growth forecast for 2023 to 5.8%, but
of infections. Against this backdrop, value added varied is lowering it for 2024 to 4.9% (cf. table 2.1).
from one industry to another. While it receded in the
industries directly affected by the pandemic (transport Consumer price inflation decreased to 1.0% in February
and accommodation) as well as in the real estate sector, (cf. chart 2.10), while core inflation remained unchanged
it increased slightly in manufacturing. For the year as at 0.6% (cf. chart 2.11).
a whole, GDP expanded by 3.0% (cf. table 2.1). Growth
thus fell significantly short of the government’s target of The People’s Bank of China has left official interest rates
around 5.5% unchanged since lowering them in August of last year
(cf. chart 2.12). However, it again reduced the minimum
The pandemic situation has improved considerably since reserve ratio for banks in March in order to support
the beginning of the year. The economy is thus expected economic activity and ensure an appropriate supply of
to pick up again rapidly. Business confidence improved liquidity to the banking system.
following the lifting of coronavirus containment measures.
Activity thus also picked up. Consumer behaviour is likely
to normalise in the current year, resulting in strong growth
in consumption. Meanwhile, the crisis in the residential
Quarterly Bulletin 1 / 2023 March 13Chart 3.1 3
���� ��
Adjusted for sporting events
Economic developments
% Index, Q4 2019 = 100 in Switzerland
40 104
30 102
20 100
10 98
0 96
Swiss GDP stagnated in the fourth quarter of 2022.1
– 10 94
The services sector lost momentum, and value added
– 20 92 in manufacturing declined slightly again. For 2022 as
– 30 90 a whole, GDP grew by 2.1%. The labour market remained
2019 2020 2021 2022 2023 very robust, and overall production capacity has been
well utilised.
Change from previous period Level (rhs)
Source(s): SECO
Despite the slight upturn in economic activity in the first
months of 2023, growth is likely to remain modest for the
rest of the year. Subdued demand from abroad and the
Chart 3.2
loss of purchasing power due to inflation are having
��� �������� ����� ����� a dampening effect. Overall, GDP is likely to increase by
around 1% this year. Unemployment should remain
Standardised low, and the utilisation of production capacity looks set
10 to decline somewhat.
The forecast for Switzerland, as for the global economy,
5
is subject to high uncertainty. In the short term, the main
risks are an economic downturn abroad and adverse effects
0
of the turmoil in the global financial sector.
OUTPUT AND DEMAND
–5
The SNB takes a wide range of information into account
when assessing the economic situation. While economic
– 10 activity appears to have been weak in the fourth quarter,
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 various indicators suggest that momentum picked up again
Source(s): SNB in the first quarter.
GDP stagnates in fourth quarter
Chart 3.3 According to the initial estimate by the State Secretariat
for Economic Affairs (SECO), GDP stagnated in the fourth
������������� ��� ��� ��� �������� quarter (0.1%). In line with expectations, economic growth
��������� was thus weak (cf. chart 3.1).
Index Index
70 150
60 125
50 100
40 75
30 50
14 15 16 17 18 19 20 21 22 23
PMI KOF Economic Barometer (rhs)
1 From Q1 2023 onwards, the GDP figures commented on in the press release
Source(s): Credit Suisse, KOF Swiss Economic Institute and Quarterly Bulletin will be adjusted for sporting events (cf. Glossary).
14 Quarterly Bulletin 1 / 2023 MarchWhile value added increased in the pharmaceutical The SNB’s Business Cycle Index and the KOF Economic
industry, it declined again in the other industries as a result Barometer aim to depict overall economic momentum.
of the slowdown in the global economy. In addition, the Both indicators point to average economic growth for the
services sector lost considerable momentum. first quarter (cf. charts 3.2 and 3.3).
There was also little growth on the demand side, with just Signals from the purchasing managers’ index (PMI)
equipment investment registering a strong increase. surveys are mixed. In manufacturing, the PMI was slightly
Private consumption saw only moderate growth, while below the growth threshold at the beginning of the year
exports and imports declined (cf. table 3.1). (cf. chart 3.3), while in services, survey results indicated
sound growth in January and February.
With the fourth-quarter estimate released, initial provisional
annual figures for 2022 are available. After the strong The talks held by the SNB’s delegates for regional
recovery in the previous year, GDP growth returned economic relations with companies also suggest that
to normal in 2022, at 2.1%. Growth was mainly supported economic growth will be more positive in the first quarter
by private consumption, which saw robust expansion than in the previous quarters. Although procurement
following the lifting of coronavirus containment measures. problems and the risk of an energy shortage have diminished
Consumer-related industries such as hospitality benefited considerably, recruitment difficulties continue to be a
particularly from this. cause for concern among companies (cf. ‘Business cycle
signals’, pp. 28 et seq.).
Economic recovery in first quarter of 2023
Many economic indicators suggest that the economy
developed more positively in the first quarter than in the
preceding quarters.
Table 3.1
REAL GDP AND COMPONENTS
Growth rates on previous period in percent, seasonally adjusted, annualised
2019 2020 2021 2022 2021 2022
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Private consumption 1.2 −4.2 1.7 4.0 −13.7 16.5 9.6 1.1 1.4 5.3 2.5 1.1
Government consumption 0.8 3.5 3.5 −0.5 5.8 2.1 2.9 1.0 −4.1 −1.4 0.9 1.2
Investment in fixed assets 0.9 −3.1 4.1 −0.8 0.9 6.6 0.5 10.5 −14.7 2.6 1.4 4.1
Construction −0.9 −1.0 −3.0 −4.3 −5.5 −3.3 −1.6 −4.5 −4.6 −4.3 −7.6 −1.8
Equipment 1.8 −4.2 8.1 1.1 4.5 12.0 1.5 18.6 −19.1 6.2 6.0 7.0
Domestic final demand 1.1 −2.9 2.7 2.0 −7.0 11.4 5.9 3.8 −4.4 3.6 2.0 2.0
Change in inventories 1 0.7 −0.1 −1.9 0.5 2.9 −4.3 −9.5 0.8 −2.0 16.8 −11.9 −1.6
Total exports 2,3 2.0 −4.5 9.9 4.1 10.0 9.2 26.7 0.5 11.4 −25.0 30.9 −3.6
Goods 2 3.5 −1.2 10.7 1.5 13.0 9.4 23.4 −6.2 20.6 −39.7 44.7 −6.4
Goods excluding merchanting 2 4.9 −3.6 12.7 5.1 19.4 9.8 13.3 12.4 5.4 −4.6 5.9 −7.3
Services 3 −0.8 −11.0 8.0 10.5 3.4 8.9 34.6 17.1 −6.9 22.6 5.5 3.2
Total imports 2,3 2.9 −5.9 4.3 5.7 7.2 8.2 10.3 6.9 0.2 6.1 14.6 −4.3
Goods 2 2.8 −6.3 4.3 8.0 3.8 0.1 14.1 3.6 21.1 −0.5 8.9 −5.7
Services 3 3.0 −5.3 4.3 2.4 12.6 20.9 5.1 11.8 −24.8 17.4 23.7 −2.2
Net exports 3,4 −0.2 0.2 3.4 −0.3 2.2 1.5 10.6 −2.9 6.8 −18.8 10.8 −0.1
GDP 3 1.5 −2.5 3.9 2.1 −0.9 7.3 6.4 1.4 1.1 1.2 0.7 0.1
1 Contribution to growth in percentage points (including statistical discrepancy).
2 Excluding valuables (non-monetary gold and other precious metals, precious stones and gems as well as works of art and antiques).
3 Adjusted for sporting events.
4 Contribution to growth in percentage points.
Source(s): SECO
Quarterly Bulletin 1 / 2023 March 15Chart 3.4 LABOUR MARKET
����-���� ���������� ����
The labour market remained in very robust shape.
Index, beginning of period = 100 Employment increased again, while unemployment
115 receded further. Companies continued to have difficulty
recruiting personnel.
110
Employment growth in fourth quarter
According to the national job statistics (JOBSTAT), the
105
seasonally adjusted number of full-time equivalent
positions rose further in the fourth quarter. New jobs
100 were created in services as well as in manufacturing and
construction (cf. chart 3.4). The Employment Statistics
95 (ES) confirmed the positive trend; the seasonally adjusted
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 number of persons employed also increased.
Total Manufacturing
Construction Services
Further decline in unemployment
In recent months, the unemployment rate published by
Source(s): SFSO; seasonal adjustment: SNB
SECO decreased further. Excluding seasonal fluctuations,
87,000 people were registered as unemployed at the end
of February, 6,000 fewer than at the end of November. The
Chart 3.5
seasonally adjusted unemployment rate stood at 1.9% at
������������ ���� the end of February and was thus the lowest it had been in
twenty years.
%
6 In addition, the Swiss Federal Statistical Office (SFSO)
5 calculates unemployment figures in line with the
International Labour Organization (ILO) definition, based
4
on data provided by the Swiss Labour Force Survey
3 (SLFS), a household survey conducted quarterly. It
2 includes people who are unemployed (although looking
for work) but not registered, or no longer registered,
1
with the regional employment offices. The SFSO
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
unemployment rate calculated in accordance with the ILO
SECO, seasonally adjusted SECO definition is therefore higher than the one published by
ILO, seasonally adjusted ILO SECO. It increased in the fourth quarter for the first time in
SECO: Unemployed persons registered with the regional employment offices, as a two years, and, at 4.4% in seasonally adjusted terms,
percentage of the labour force (economically active persons).
ILO: Unemployment rate based on International Labour Organization definition. was slightly above its pre-pandemic level (cf. chart 3.5).
Source(s): SECO, SFSO
Difficulty recruiting personnel
According to JOBSTAT, companies continued to have
Chart 3.6 difficulty recruiting personnel in the fourth quarter.
Many vacant positions could not be filled, or only with
����������� ������������ considerable effort. While the recruitment situation
Qualified workers remained virtually unchanged in both services and
Share of companies in % construction, it deteriorated somewhat in manufacturing
90 (cf. chart 3.6).
80
70
60
50
40
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total Manufacturing
Construction Services
Estimate based on the national job statistics (JOBSTAT). Only companies that are
actively recruiting are taken into account.
Source(s): SFSO, SNB
16 Quarterly Bulletin 1 / 2023 MarchChart 3.7
CAPACITY UTILISATION
������ �
Output gap closed
%
The output gap, defined as the percentage deviation
2
of actual GDP from estimated aggregate potential output,
shows how well production capacity in an economy 0
is being utilised. In the case of overutilisation the gap is
positive, and in the case of underutilisation it is negative. –2
–4
Potential output as estimated by means of a production
function shows a closed output gap for the fourth quarter. –6
Other estimation methods indicate a slightly positive gap
(cf. chart 3.7). –8
– 10
Well-utilised production capacity
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
In addition to estimating the aggregate output gap, surveys
also play an important role in assessing utilisation levels. Production function HP filter MV filter
The surveys conducted by KOF show that technical capacity Source(s): SNB
was well utilised overall in the fourth quarter. In
manufacturing, utilisation was close to its long-term average
(cf. chart 3.8). The same applies to services. Utilisation in
Chart 3.8
construction, meanwhile, was high (cf. chart 3.9).
�������� ����������� �� �������������
As regards the labour situation, the surveys indicate that
staff shortages did not get any worse in the fourth quarter. %
Nevertheless, staff numbers in most industries were still 86
considered to be low.
84
82
80
78
76
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Capacity utilisation Long-term average
Source(s): KOF Swiss Economic Institute
Chart 3.9
�������� ����������� �� ������������
%
80
78
76
74
72
70
68
66
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Capacity utilisation Long-term average
Source(s): KOF Swiss Economic Institute
Quarterly Bulletin 1 / 2023 March 17Chart 3.10
OUTLOOK
������������� ��� ������
Export-weighted, 27 countries The economic outlook for Switzerland remains muted.
Index As shown by the export-weighted manufacturing PMI,
60
there are signs of weakening from abroad (cf. chart 3.10).
Accordingly, manufacturing in Switzerland is likely
55
to remain lacklustre. The outlook in the services sector is
somewhat more positive. Overall, expectations among
50 Swiss companies regarding the future business situation
have recovered once again (cf. chart 3.11). Conditions
45 on the labour market are likely to remain difficult. The
employment outlook remains favourable, despite the
40 fact that survey results recently presented a mixed picture
(cf. chart 3.12).
35
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 GDP is likely to expand by around 1% this year. The
Source(s): International Monetary Fund – Direction of Trade Statistics (IMF – DOTS),
forecast is slightly higher than in December, given that
Refinitiv Datastream, SNB economic growth looks set to be somewhat more positive
in the first quarter. The growth outlook for the rest of
the year is modest. Foreign demand is unlikely to provide
much momentum. In addition, the loss of purchasing
Chart 3.11
power due to inflation will weigh on private consumption.
��� ���� � ���� �� Against this backdrop, the outlook for corporate investment
Average across all KOF surveys also continues to be subdued. Unemployment is likely
to remain low, and the utilisation of production capacity
Index
looks set to decline somewhat.
40
20
The level of uncertainty associated with the forecast
remains high. The main risks are an economic downturn
0 abroad and adverse effects of the turmoil in the global
financial sector. Although the risk of an escalation in
– 20 the energy situation in Europe and a power shortage in
Switzerland has abated somewhat in the short term, the
– 40 situation could deteriorate again over the course of the year.
– 60
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Assessment Expected change, next 6 months
Source(s): KOF Swiss Economic Institute
Chart 3.12
������ �� �������
Seasonally adjusted, standardised
3
2
1
0
–1
–2
–3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
SNB SFSO 1 KOF
1 Seasonal adjustment: SNB.
Source(s): KOF Swiss Economic Institute, SFSO, SNB regional network
18 Quarterly Bulletin 1 / 2023 March4 Chart 4.1
���: �������� ��� �������� ����� ���
Prices and inflation ��������
Year-on-year change in CPI in percent. Contribution of individual
expectations components, in percentage points.
4
3
2
1
0
The inflation rate as measured by the CPI has risen again
–1
since November, returning to the level recorded last
summer. It stood at 3.4% in February of this year, thus –2
remaining significantly above the range consistent 2019 2020 2021 2022 2023
with price stability, which the SNB equates to a rise in the Total Domestic
CPI of less than 2% per year. Both core inflation measures Imported, excluding oil products Oil products
increased, the SFSO1 from 1.9% to 2.4% and the TM15 Source(s): SFSO, SNB
from 1.9% to 2.3%.
Short-term inflation expectations moved in different
directions and remained elevated. Longer-term Chart 4.2
expectations, by contrast, were virtually unchanged and ���: �������� ����� ��� ��������
still within the range consistent with price stability. Year-on-year change in domestic CPI in percent. Contribution of
individual components, in percentage points.
CONSUMER PRICES
3
Higher annual inflation rate
Annual CPI inflation stood at 3.4% in February, compared 2
with 3.0% in November (cf. chart 4.1, table 4.1).
The renewed rise in annual CPI inflation was primarily 1
attributable to price developments in domestic goods
and services, which saw inflation climb from 1.8% in 0
November to 2.9% in February.
–1
Inflation for imported products down further 2019 2020 2021 2022 2023
Inflation for imported goods and services decreased from Total domestic goods and services Goods
6.3% in November to 4.9% in February (cf. table 4.1). Services, excluding housing rents Housing rents
Source(s): SFSO, SNB
Table 4.1
SWISS CONSUMER PRICE INDEX AND COMPONENTS
Year-on-year change in percent
2022 2022 2022 2023
Q1 Q2 Q3 Q4 Nov Dec Jan Feb
Overall CPI 2.8 2.1 3.0 3.4 2.9 3.0 2.8 3.3 3.4
Domestic goods and services 1.6 1.2 1.5 1.8 1.8 1.8 1.9 2.6 2.9
Goods 2.9 1.2 2.5 3.3 4.3 4.4 4.3 7.0 7.1
Services 1.1 1.2 1.1 1.2 0.9 0.9 1.0 1.2 1.5
Private services excluding housing rents 1.1 1.4 1.3 1.3 0.4 0.4 0.7 1.0 1.5
Housing rents 1.4 1.4 1.5 1.4 1.4 1.5 1.5 1.5 1.5
Public services 0.5 0.0 0.0 0.7 1.2 1.2 1.2 1.1 1.3
Imported goods and services 6.7 4.8 7.5 8.3 6.3 6.3 5.8 5.2 4.9
Excluding oil products 3.9 2.1 3.6 4.7 5.0 5.0 4.9 4.7 5.1
Oil products 31.8 28.1 42.5 39.6 18.0 18.1 12.9 9.8 3.4
Source(s): SFSO, SNB
Quarterly Bulletin 1 / 2023 March 19Chart 4.3 While inflation for oil products recorded a further marked
������� � ��� decline between November and February, inflation for
the other imported goods and services rose from 5.0% in
% November to 5.1% in February.
1.6
1.4 Higher inflation for domestic products
The considerably higher domestic inflation is due to an
1.2
increase in inflation for both domestic goods and domestic
1.0 services (cf. chart 4.2).
0.8
0.6 Inflation for domestic goods came to 7.1% in February,
having stood at 4.4% in November. A key factor behind
0.4
this rise were the higher average electricity prices
0.2 for households, applicable from January for the whole of
2019 2020 2021 2022 2023 2023. Inflation for domestic services also increased, from
Housing rents (year-on-year change) 0.9% in November to 1.5% in February.
Reference mortgage rate
Source(s): Federal Office for Housing (FOH), SFSO Rent inflation unchanged
Housing rent inflation stood at 1.5% in February, unchanged
from November (cf. chart 4.3). The reference mortgage
rate has remained at 1.25% since the beginning of 2020.
Chart 4.4
���� ��������� ����� Core inflation up
Year-on-year change Core inflation, as measured by the SNB’s trimmed mean
(TM15), increased from 1.9% in November to 2.3% in
%
February, thus reaching its highest level since 1993. The
4
SFSO core inflation rate 1 (SFSO1), which has been
3 measured since 2000, also reached a new high of 2.4% in
February, compared with 1.9% in November (cf. chart 4.4).
2
1 PRODUCER AND IMPORT PRICES
0
Lower inflation for producer and import prices
–1 Inflation for total producer and import prices decreased
from 3.8% in November to 2.7% in February (cf. chart 4.5).
–2
While import prices saw a significant decline in inflation,
2019 2020 2021 2022 2023
producer prices recorded a slight increase. In February,
CPI TM15 SFSO1 inflation for producer prices was 3.0%, thus exceeding the
Source(s): SFSO, SNB level for import prices – which stood at 2.3% – for the first
time since the beginning of 2021. In the case of producer
prices, the inflation contribution made by oil products fell,
Chart 4.5 while the contribution from chemical and pharmaceutical
products rose. The decrease in inflation for import prices
�������� ��� ������ ������ was primarily driven by the substantial drop in prices for
Year-on-year change oil products and gas. The prices for goods which are not
% further processed have remained largely unchanged since
15 November.
10
5
0
–5
– 10
2019 2020 2021 2022 2023
Total Producer prices Import prices
Source(s): SFSO
20 Quarterly Bulletin 1 / 2023 MarchINFLATION EXPECTATIONS Chart 4.6
�����-���� ����� ��� ��������� ������������
Short-term inflation expectations remain elevated Aggregate responses from SECO survey on consumer sentiment and
While the short-term inflation expectations were declining CS CFA financial market survey
in the surveys at the beginning of the quarter, the March Index Index
survey conducted by Consensus Economics recorded 200 100
a renewed rise.
100 50
The index on the expected development of prices over the
next twelve months – which is based on the consumer 0 0
sentiment survey conducted by SECO – fell (cf. chart 4.6).
Nevertheless, the survey conducted in January indicated – 100 – 50
that around three-quarters of households still anticipate
a rise in prices in the short term. – 200 – 100
14 15 16 17 18 19 20 21 22 23
Likewise, the index based on the joint monthly financial SECO: expected price development in 12 months
market survey by Credit Suisse and the CFA Society CS CFA: expected inflation rate in 6 months (rhs)
Switzerland was latterly at a lower level than the previous Source(s): CFA Society Switzerland, Credit Suisse, SECO
quarter (cf. chart 4.6). According to the February survey,
almost two-thirds of respondents expected inflation to fall
in the next six months.
Chart 4.7
In the talks conducted by the SNB’s delegates for regional �����-���� ��������� ������������ ����
economic relations, companies expected inflation to ��������� ���������
fall further in the short term (cf. chart 10 in ‘Business cycle Monthly forecasts for annual inflation
signals’). The expected annual inflation rate for the next %
six to twelve months decreased from 3.1% in the previous 3.0
quarter to 2.4%.
2.5
The banks and economic institutions participating in the 2.0
monthly survey conducted by Consensus Economics,
1.5
by contrast, latterly increased their forecast for expected
inflation in 2023, putting it at 2.5% in March (cf. chart 4.7). 1.0
The panel of experts anticipated a fall in inflation to 1.4% 0.5
for 2024, but had expected 1.2% in February.
0.0
2022 2023
Longer-term inflation expectations largely unchanged
Longer-term inflation expectations remained almost 2023 2024
unchanged. Source(s): Consensus Economics Inc.
For CS CFA financial market survey respondents, average
inflation expectations for a time horizon of three to five Chart 4.8
years increased slightly from 1.7% in September to 1.8%
in December (cf. chart 4.8). Company representatives ������ ��� ����-���� ���������
interviewed by the SNB’s delegates put inflation for the ������������
same time frame at just 1.5%, compared with 1.7% in the %
previous quarter. 2.0
According to the Consensus Economics survey conducted 1.5
in January, the long-term inflation expectations of
participating banks and economic institutions latterly stood 1.0
at 1.1%, which was marginally lower than in the previous
quarter (1.2%). 0.5
0.0
Survey results on medium and long-term inflation
14 15 16 17 18 19 20 21 22 23
expectations were thus still within the range consistent
with price stability, which the SNB equates to a rise in CS CFA financial market survey (3–5 years)
the CPI of less than 2% per year. SNB delegates for regional economic relations (3–5 years)
Consensus Economics (6–10 years)
Source(s): CFA Society Switzerland, Consensus Economics Inc., Credit Suisse, SNB
Quarterly Bulletin 1 / 2023 March 215 Remuneration of sight deposits
With the increase in the SNB policy rate, sight deposits up
Monetary developments to the threshold have been remunerated since the monetary
policy assessment in December at an interest rate of
1.0%. At the same time, in December the SNB also raised
the interest rate on sight deposits above the threshold by
0.5 percentage points to 0.5%. A discount of 0.5 percentage
points relative to the SNB policy rate thus continued to
apply to such sight deposits. Together with the absorption
In the period following the December monetary policy of sight deposits via open market operations, this tiered
assessment, persisting global uncertainty about both the remuneration of sight deposits ensured that the tighter
course of inflation and the outlook for monetary policy monetary policy will be passed through efficiently to
were key factors shaping developments on the financial interest rates in the money market overall.
markets. In March, concerns about the stability of
the banking system contributed to additional uncertainty, Absorption of sight deposits via repo transactions
which abated again somewhat in mid-March owing to and SNB Bills
the stabilising measures introduced by governments and Since the monetary policy assessment in December 2022,
central banks as well as the takeover of Credit Suisse the SNB has continued to absorb sight deposits by way
by UBS. of repo transactions and the issuance of SNB Bills. For this
purpose, repo transactions with a term of one week were
These developments led to strong fluctuations in both auctioned daily, while SNB Bills with terms ranging from
share prices and Confederation bond yields, and also a week to a year were auctioned on a weekly basis.
influenced exchange rate dynamics. Furthermore, in the overnight segment, repo transactions
were in some cases conducted on a bilateral basis. By
In mid-March, the yields on long-term Confederation absorbing sight deposits, the SNB reduced the liquidity
bonds and prices on the Swiss stock market were supply in the money market, and thus ensured that the
somewhat lower than at the time of the December secured short-term money market rates remained close to
monetary policy assessment, whereas there was little the SNB policy rate. Since the December monetary
change in the Swiss franc exchange rate against the policy assessment, outstanding liquidity-absorbing repo
currencies of major trading partners. transactions have averaged CHF 64.6 billion. In the
same period, the average level of outstanding SNB Bills
The SNB’s liquidity-absorbing measures resulted in a amounted to CHF 99.2 billion.
further reduction in the monetary base between November
and February. The broad monetary aggregates M1 and M2 Reduction in sight deposits at the SNB
contracted, while M3 remained stable. However, growth in After the monetary policy assessment in December, sight
bank lending was still robust. deposits held at the SNB initially decreased further before
rising again from 16 March 2023 following the liquidity
MONETARY POLICY MEASURES SINCE assistance provided to Credit Suisse. In the week ending
THE ASSESSMENT IN DECEMBER 2022 17 March 2023 (last calendar week before the assessment
of March 2023), they amounted on average to CHF 515.1
Monetary policy tightened in December billion. This was, however, still lower than in the week
At its monetary policy assessment of 15 December 2022, ending 9 December 2022, i.e. the last calendar week
the SNB decided to tighten its monetary policy further. In preceding the December assessment (CHF 542.3 billion).
doing so, it was countering increased inflationary pressure Between these two assessments, they averaged CHF 529.6
and a further spread of inflation. It raised the SNB policy billion. Of this amount, CHF 506.3 billion were sight
rate by 0.5 percentage points to 1.0%. Furthermore, deposits of domestic banks and the remaining CHF 23.3
it confirmed its willingness to be active in the foreign billion were other sight deposits.
exchange market as necessary so as to provide appropriate
monetary conditions. Statutory minimum reserves averaged CHF 23.2 billion
between 20 November 2022 and 19 February 2023.
Overall, banks still exceeded the minimum reserve
requirement by CHF 490.4 billion (previous period:
CHF 561.0 billion). Banks’ excess reserves thus remained
very high.
22 Quarterly Bulletin 1 / 2023 MarchMONEY AND CAPITAL MARKET INTEREST RATES Chart 5.1
��� ����� ���� ��� �����
SARON close to SNB policy rate
With the increase in the SNB policy rate by 0.5 percentage %
points to 1.0% at the monetary policy assessment in 1.0
December, the SNB continued to pursue its course of
monetary policy tightening. SARON, the average overnight 0.5
interest rate on the secured money market, also increased
as a result. Having fluctuated for the most part between
0.93% and 0.96% since end-December, it stood somewhat 0.0
lower at 0.91% in mid-March, latterly supported by fine-
tuning operations (cf. chart 5.1). – 0.5
High volatility in capital market interest rates
In mid-March, the yield on ten-year Confederation bonds – 1.0
stood at just under 1.1%, which was slightly below the Q1 22 Q2 Q3 Q4 Q1 23 Q2 Q3 Q4
level recorded at the December assessment (around 1.2%). SNB policy rate SARON
Since the last monetary policy assessment, however, Source(s): Bloomberg, SIX Swiss Exchange Ltd, SNB
yields have fluctuated strongly (cf. chart 5.2). The volatility
in Confederation bond yields was largely in line with
developments of long-term government bonds in the US
Chart 5.2
and the euro area. It was a reflection of the continued high
level of global uncertainty about the course of inflation ��-���� ����� ������������� ���� �����
and the outlook for monetary policy as well as of concerns
that arose in March about the turmoil in the global %
financial sector and the countermeasures introduced by 2.0
governments and central banks. 1.5
Flattening of yield curve 1.0
The yield curve for Confederation bonds flattened
0.5
considerably compared to the last monetary policy
assessment (cf. chart 5.3). The slight upwards shift at the 0.0
short end of the yield curve essentially reflects the fact
that financial markets were expecting a slightly more – 0.5
pronounced tightening of monetary policy over the short – 1.0
term than at the time of the December assessment. The
shift for longer maturities occurred during March when – 1.5
concerns about the banking system were mounting, and 2019 2020 2021 2022 2023
partially reflected market expectations of less prolonged Source(s): SNB
monetary policy tightening as well as increased demand
for safe investments.
Chart 5.3
Real interest rates remain historically low
Real interest rates – the difference between nominal ���� ��������� �� ������������� �����
interest rates and inflation expectations – are an important Years to maturity (horizontal axis); Nelson-Siegel-Svensson method
factor in the saving and investment decisions of companies %
and households. 1.25
1.20
Long-term nominal yields fluctuated substantially over the 1.15
course of the quarter and in mid-March they stood slightly 1.10
below the level recorded in mid-December. 1.05
1.00
As long-term inflation expectations were virtually 0.95
unchanged (cf. chapter 4), long-term real interest rates
0.90
remained roughly on par with the previous quarter. By
0.85
historical standards, the estimated long-term real interest
0 5 10 15 20
rate was thus still at a low level.
Mid-March 2023 Mid-December 2022
Mid-September 2022
Source(s): SNB
Quarterly Bulletin 1 / 2023 March 23Chart 5.4 EXCHANGE RATES
�������� �����
Swiss franc little changed against euro and US dollar
1.02 Compared with the last monetary policy assessment in
December, the Swiss franc has seen little change against
1.00 the euro and the US dollar (cf. chart 5.4). Fluctuations
in both exchange rates since the December assessment are
0.98
largely a reflection of changing expectations regarding
the monetary policy stances in Switzerland, Europe and
0.96
the US. Accordingly, the exchange rates of the euro and
0.94 US dollar in Swiss francs moved roughly in parallel with
the interest rate differential between these currencies
0.92 and the franc, with increases in the interest rate differential
being accompanied in each case by a depreciation of the
0.90 Swiss franc. In March, the emerging turmoil in the global
Oct 22 Nov Dec Jan 23 Feb Mar financial sector resulted in exchange rate fluctuations.
USD in CHF EUR in CHF
Source(s): SNB After the last monetary policy assessment, the Swiss franc
initially trended sideways against the euro. It depreciated
slightly in January, so that one euro was briefly worth
somewhat more than a franc. Having strengthened
Chart 5.5
marginally at the beginning of February, the franc again
������� �������� ����� �� ����� ����� weakened somewhat at the end of the month. It then
appreciated initially in the wake of the US banking sector
Index, December 2022 monetary policy assessment = 100 problems, before losing value again as the Credit Suisse
103 difficulties shifted into the focus of the market participants.
In mid-March one euro was worth around CHF 0.99.
102
Following a slight appreciation against the US dollar
101
in January, the Swiss franc weakened again somewhat
100
in February. During March, it followed a similar pattern
against the US dollar as against the euro, and stood at
99 CHF 0.92 to the dollar in mid-March.
98 Trade-weighted Swiss franc exchange rate essentially
unchanged
97 For much of the previous quarter, the nominal trade-
Oct 22 Nov Dec Jan 23 Feb Mar weighted Swiss franc exchange rate saw little change.
Source(s): SNB Owing to the turbulence in the banking sector, the franc
initially appreciated in March against the currencies
of most of its trading partners before losing in value again.
Chart 5.6 In mid-March, its trade-weighted exchange rate was
at roughly the same level as at the time of the December
���� �������� ����� �� ����� ����� assessment (cf. chart 5.5).
Index, December 2000 = 100
Real Swiss franc exchange rate relatively stable
130
At the beginning of 2023, the Swiss franc was, in real
125
terms, back at a level similar to before the outbreak of the
coronavirus pandemic in early 2020. This reflects the
120 fact that the significantly higher levels of inflation abroad
compared to Switzerland since the beginning of 2020
115 were roughly offset by the franc’s nominal appreciation
in the same period (cf. chart 5.6).
110
105
100
09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Source(s): SNB
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