Interest Rate Dynamics and Monetary Policy Implementation in Switzerland
Swiss Journal of Economics and Statistics / Schweizerische Zeitschrift für Volkswirtschaft und Statistik / Revue Suisse d'Economie politique et de Statistique, Volume 146, Issue 1, 2010, Pages 313-340
Keywords
Implementation of Monetary Policy, Operational Targets of Monetary Policy, Three-Month Rate Targeting, Financial Crisis
Abstract
The maturity of the operational target of monetary policy is a distinguishing feature of the SNB''s operational framework of monetary policy. While most central banks use targets for the overnight rate to signal the policy-intended interest rate level, the SNB announces a target range for the three-month Libor. This paper investigates the working and the consequences of the SNB''s unique operational framework for the behavior of Swiss money market rates before and during the financial crisis.