A similar view emerges from the talks conducted every quarter with over 200 companies by the SNB’s delegates for regional economic relations. Inflation expectations are thus within the range that is consistent with the SNB’s definition of price stability. Like inflation expectations, short and long-term interest rates in Switzerland have hardly changed since summer. Short-term money market rates have remained close to –0.75%, and the yield on ten-year Confederation bonds has fluctuated between 0% and –0.2%. The interest rate differential with the euro area has been largely stable. By contrast, the interest rate differential with the US has widened somewhat, due to higher US interest rates resulting from tighter monetary policy. There has, however, been movement since June with respect to exchange rates. Over the past six months, the Swiss franc has depreciated against the euro by about 7%. In addition, since the last monetary policy assessment in September, a mild weakening has occurred against the US dollar. The trade-weighted nominal exchange rate for the Swiss franc is currently about 5% lower than in June. The depreciation in real terms is roughly similar. The weakening of the Swiss franc has contributed to reducing the overvaluation. However, the franc is still highly valued. What lies behind these exchange rate movements? In the first phase, from June to September, the Swiss franc depreciated against the euro, while remaining largely stable against the US Page 3/4  Berne, 14 December 2017 Thomas Jordan  News conference  dollar.
For the euro area and the US, we have revised our growth forecasts slightly upwards. Economic recovery and convergence with the inflation target are most advanced in the US. This prompted the US Federal Reserve to carry out a number of interest rate adjustments and to initiate the reduction of the balance sheet this year. The coming quarters are likely to see a gradual continuation of monetary policy normalisation in the US. By contrast, the European Central Bank intends to pursue its asset purchase programme until at least September 2018, and to leave its key rates unchanged beyond that horizon. In Japan, too, monetary policy is expected to remain expansionary. Alongside the global economic baseline scenario, the risks also need to be taken into consideration. In the short term, global growth could be stronger than projected in the baseline scenario, due to the significant upturn in household and business confidence. In the medium term, however, risks for the international economy are still to the downside. These risks include ongoing structural weaknesses, political developments in certain countries, and potential international tensions. Furthermore, the normalisation of monetary policy in the advanced economies presents challenges. An abrupt rise in the currently very low capital market interest rates and risk premia, in particular, could negatively impact the global economy. Swiss economic outlook  I shall now turn to the economic outlook for Switzerland. GDP grew in the third quarter at an annualised 2.5%, lending further momentum to the economic recovery.