to a revival of interest in the topic of monetary policy coordination. 9 but formal monetary policy coordination is complex, for well - known reasons. 10 central banks have national mandates, not global ones, and are accountable to their domestic parliament. this does not mean, however, that we cannot achieve a better global solution than we have today. we have seen, for instance, how divergent monetary policies among major central banks can create uncertainty about future policy intentions, which in turn leads to higher exchange rate volatility and risk premia. that then has to be countered with more expansionary monetary policy, increasing spillover effects for others. we also know that competitive devaluations are lose - lose for the global economy, since they lead only to greater market volatility, to which other central banks are then forced to react to defend their domestic mandates. so we would all clearly benefit from enhanced understanding among central banks on the relative paths of monetary policy. that comes down, above all, to improving communication over our reaction functions and policy frameworks. the global economy could also benefit from cooperation among spillover - initiating and spillover - receiving economies on how to mitigate unwanted side effects. one aspect that we need to understand better is how domestic monetary regimes affect the transmission of foreign monetary policy shocks. there has been a debate in recent years as to whether the famous “ trilemma ” of international macro has collapsed into a “ dilemma ”, whereby floating exchange rates no longer guarantee autonomy for domestic monetary policy, and policy independence is only possible if capital flows are in fact managed. 11 but see ammer et al. ( 2016 ), “ international spillovers of monetary policy ” ifdp notes. see georgiadis ( in press ), “ determinants of global spillovers from us monetary policy ”, journal of international money and finance ; feldkircher and huber ( 2015 ), “ the international transmission of u. s. structural shocks – evidence from global vector autoregressions ”, european economic review, vol. 81 ( c ), pages 167 – 188 ; kim ( 2001 ), “ international transmission of u. s. monetary policy shocks : evidence from vars ”, journal of monetary economics, vol. 48 ( 2 ), pp. 339 – 372. see ammer et al. ( 2016, op cit. ). see rajan ( 2016 ), “ towards rules of the monetary game ”, speech at at the imf /

the revision of the inflation forecast is a clear sign that deflation risks have increased once more. global economic outlook the snb ’ s inflation forecast is embedded in a global economic scenario. let me now discuss our assessment of the global economy. global economic developments continue to be mixed. the us, uk and china all saw robust growth in the third quarter. in the euro area and japan, by contrast, it was weaker than expected. in addition, inflation in the advanced economies was below central bank targets – in some cases by a considerable margin. in the euro area, it is only just in positive territory. the decline in commodity prices, above all crude oil, will curb inflation further over the short term. we continue to assume that global economic growth will gradually firm over the course of next year. the considerable fall in oil prices should be a contributory factor. however, the bis central bankers ’ speeches prospects for individual countries vary widely. for the us, we are expecting that growth will remain robust over the next few quarters, leading to better utilisation of economic capacity. for the euro area, by contrast, we have revised the growth forecast downwards once more, and the outlook for this region remains very subdued. the picture for the emerging economies is mixed. china will continue to be a driver of the global economy, although it is likely to see a gradual weakening of growth. for india, growth prospects are picking up again. the outlook for brazil and russia, by contrast, remains muted. overall, the global economic outlook is still very uncertain and dominated by downside risks – the most important of which are the continuing difficult conditions in the euro area and a possible escalation in geopolitical tensions. swiss economic outlook i will now look at economic developments in switzerland. following a weak second quarter, real gdp growth was unexpectedly favourable in the third. on the demand side, the increase was supported predominantly by goods exports, with manufacturing the main beneficiary of the strong export demand. however, private and public consumption also picked up, after having registered only lacklustre growth in the first half of the year. momentum in equipment investment, by contrast, remained weak. in part, growth was also boosted by special factors, including an unusually large increase in value added in the healthcare industry. despite the positive developments of the third quarter, utilisation of economic capacity remains unsatisfactory. we are assuming that growth will be markedly lower in the fourth quarter. in particular, export