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It has been a decade since
global interest rates reached the zero lower bound, where monetary policymakers
lose their ability to stimulate the economy using conventional policy tools.
Among the largest global central banks, only the United States Federal Reserve
has set its benchmark above 2 percent. Will this anomaly end in 2019?
Swiss economy is doing remarkably well. Though it is growing only slowly, its
companies are competitive, unemployment is virtually absent, inflation is close
to zero and public debt is under control. One would therefore expect the Swiss
National Bank to abstain from taking an active role in monetary policy or
manipulating interest rates and exchange rates. Yet, last June the SNB
announced that it intends to play an active role, and that it will expand its
money supply to enhance growth and avoid deflation. These explanations are not
convincing – the key is somewhere else: bruised Swiss manufacturers.
Professor Enrico Colombatto
The United States Federal Reserve made news last week by raising its benchmark interest rate. However, even if the Fed continues with modest hikes, globally, rates close to and even below zero are here to stay, especially in the eurozone. Some observers explain this unusual state of affairs by citing economic trends (long-term stagnation), while others blame moneta...
Dr. Michael Wohlgemuth