The real shift in monetary policy is the end of a one-size-fits-all response to inflation. Between 2021 and 2023, average inflation in advanced economies rose from about 2% to over 9% in several developed countries, driven mainly by energy and commodity prices. But the consequences varied dramatically depending on economic structures: Norway and Canada benefited from a positive shock to their external revenues, while Germany, Italy, and Japan experienced a sharp deterioration in their terms of trade. Switzerland presents a particularly interesting case. Despite the European energy shock, Swiss inflation remained well below that of the eurozone, peaking at close to 3.5%, thanks to the appreciation of the Swiss franc, which cushioned imported inflation. This divergence shows that the same energy shock can be expansionary for some countries, recessionary for others, and relatively manageable for economies with a strong and credible currency.
Commodity-exporting economies are better off allowing their currencies to absorb shocks.Preventing exchange rate appreciation following a rise in commodity prices results in very significant welfare losses and causes domestic overheating. For an emerging commodity exporter, maintaining a fixed exchange rate can result in an inefficient output gap of more than 25% compared to the optimal scenario. Conversely, a flexible exchange rate naturally absorbs excess foreign income and limits inflationary imbalances. Switzerland indirectly illustrates this logic in reverse: as a net importer of energy but with a safe-haven currency, it has used the strength of the franc as an anti-inflationary tool. The Swiss National Bank has thus accepted a stronger franc in order to reduce the cost of energy and industrial imports, demonstrating that a credible exchange rate itself becomes an instrument of monetary policy.
Energy-importing countries cannot completely neutralize inflation without triggering a severe recession.In the importing economies studied, raw materials account for about 20% of production inputs and nearly 10% of the direct consumption basket. A 10% increase in energy prices therefore automatically spreads throughout the entire cost chain. Simulations show that a strategy of strictly stabilizing domestic inflation leads to an economic contraction of nearly 9% in advanced economies and more than 16% in some emerging economies. The economic cost of full disinflation thus becomes disproportionate. This is precisely why many central banks have accepted some inflation beyond 2022 in order to avoid a more severe recession. In Switzerland as well, despite relatively low inflation, monetary authorities have favored a gradual approach, leveraging the franc’s credibility to avoid an excessively abrupt monetary tightening.
Emerging markets remain far more vulnerable to commodity and currency cycles.Empirical studies cited in the research show that a 10% change in commodity prices can shift emerging-market sovereignspreads by nearly 200 basis points in certain countries heavily dependent on natural resource exports. This financial sensitivity significantly amplifies economic cycles. A decline in commodity prices reduces export revenues, worsens financing conditions, causes currency depreciation, and simultaneously accelerates imported inflation. This mechanism explains the “fear of floating” characteristic of emerging markets: allowing the currency to float freely can quickly become destabilizing for banks, companies with foreign-currency debt, and monetary credibility. In contrast, Switzerland enjoys a rare advantage: during periods of global stress, capital flows into the Swiss franc rather than out of the country. This ability to attract capital transforms the exchange rate into a financial stabilizer rather than a source of vulnerability.
Wages are gradually becoming the main indicator monitored by central banks.Academic research shows that in nearly all scenarios studied, the optimal monetary policy is the one that most effectively stabilizes nominal wages. The reasoning is simple: energy prices can be extremely volatile and largely driven by imports, whereas wages reflect sustained domestic pressures much more directly. This is precisely what central banks observed after 2022. As long as energy inflation remained primarily concentrated in imported goods, several institutions adopted a wait-and-see approach. But when wage increases began to accelerate beyond 4% in several developed economies, the risk of second-round effects became much more concerning and led to more aggressive monetary tightening. In Switzerland, where wage pressures remained more contained than in the United States or Europe, the SNB was able to maintain a relatively less restrictive monetary policy path.
The macroeconomic landscape of the coming years will be more fragmented, more volatile, and much more dependent on energy.Simulations show that the optimal volatility of inflation and exchange rates will now be higher than it was during the 2010s, as central banks will have to absorb more frequent supply shocks linked to geopolitics, climate, and trade fragmentation. The disparities between commodity-importing and commodity-exporting economies are therefore expected to become more pronounced, as are divergences in monetary policy. In this new environment, Switzerland appears relatively well-positioned thanks to three key characteristics: the exceptional credibility of its central bank, the Swiss franc’s role as a safe-haven currency, and the country’s ability to absorb external shocks through the exchange rate rather than through high inflationary volatility. For investors, this means that the relative performance of markets will increasingly depend on the energy structure of economies, the robustness of monetary institutions, and the ability of currencies to act as a buffer against future commodity cycles.
