these have a considerable bearing on the inflation and economic outlook in switzerland. since the last monetary policy assessment in september, the global economy has developed in line with our expectations. it has continued to recover and capacity utilisation in many countries is improving gradually. this is especially evident in the labour market, where job numbers are on the rise and unemployment is declining. however, global economic growth is moderate and not yet broad - based. international trade and demand for investment in particular continue to be subdued. inflationary pressure abroad also remains low. although higher energy prices are currently resulting in a marked increase in inflation, core inflation remains at a low level in a number of countries and central banks are thus maintaining their expansionary monetary policy course. among advanced economies, the economic cycle has progressed furthest in the us. thirdquarter gdp growth in the us was again significantly above potential. private consumption was once more the driving force. the situation on the labour market continued to improve as well ; the us economy has now almost reached full employment. this is also reflected in more robust real wage growth. inflation is now close to the target set by the us federal reserve. against this backdrop, the federal reserve decided yesterday to raise its key interest rate by 25 basis points. this move is confirmation that – in the federal reserve ’ s view – the world ’ s largest economy is gradually emerging from a protracted period of crisis. the other major economic areas also recorded favourable economic activity in the third quarter. the euro area and japan continued to register moderate growth, while in china, growth remained strong thanks to a variety of fiscal measures. in the uk, the economic impact of the brexit decision has so far proved less pronounced than originally feared. however, the country ’ s economic performance is still expected to be impaired by this outcome in the coming quarters. our assessment of international economic developments over the next few quarters has remained largely unchanged since september. the snb expects the moderate pace of global growth to continue in 2017. it is thus likely that the economic situation will continue to improve, particularly in the euro area, and that inflation will also pick up somewhat. page 2 / 5 berne, 15 december 2016 thomas jordan news conference our baseline scenario for the global economy is still subject to considerable risks, however. structural problems in a number of advanced economies – such as a fragile financial system, high public debt and low growth potential – could negatively affect the outlook. added to this are a multitude of political uncertainties.

welfare depends critically on how well we master these challenges. page 3 / 5 berne, 15 december 2016 thomas jordan news conference exchange rates, interest rates and inflation expectations i will now review changes to monetary conditions since the middle of the year. the last half year has been shaped by the surprising outcomes of a number of political events. the brexit decision led to a significant devaluation of the pound sterling and generated upward pressure on safe - haven currencies. thanks to our willingness to intervene in the foreign exchange market, we were able to cushion the effect of the additional pressure on the swiss franc, which can often build up in such phases of increased market volatility. equally, neither the us elections nor the italian constitutional referendum caused any significant changes in the value of the franc overall. on a trade - weighted basis, the real external value of the franc hardly changed over the course of the year. an analysis of nominal exchange rates since our last assessment in june shows that the franc has appreciated slightly against the euro. against the dollar, meanwhile, it has depreciated somewhat. one reason for the appreciation of the us dollar against the swiss franc and most other currencies is the substantial increase in long - term interest rates in the us, particularly following the presidential election. long - term yields on swiss confederation bonds have also risen, but yield increases have been less pronounced here than in the us. the interest rate differential with the us has thus widened. short - term rates in switzerland are virtually unchanged, with the yield curve steepening as a result. inflation expectations in switzerland remain stable. most households, companies and financial analysts anticipate that inflation will be slightly positive in the short to medium term. this view is substantiated in the surveys conducted by the snb ’ s delegates for regional economic relations. despite weak inflation in recent years, long - term inflation expectations have changed very little and remain firmly anchored in the range which we equate with price stability. monetary policy outlook ladies and gentlemen, let me summarise my key points. even in times of turbulence such as those witnessed in the last six months, our monetary policy has proved its worth. the negative interest rate has partially restored the traditional interest rate differential with other currencies and has thus made swiss franc investments less attractive. during periods of high volatility, our willingness to intervene in the foreign exchange market has a stabilising effect on the exchange rate.