The Swiss National Bank will hold its latest quarterly monetary policy meeting on Thursday.
In line with most major central banks, the Swiss authorities are facing the combination of weaker growth and rising inflationary pressure. The bank will also be watching financial-market developments with increasing alarm as the franc continues to strengthen.
Although the evidence is that the pressures are still relatively mild, there will be some unease over the latest ZEW survey release which recorded a further sharp decline to -71.7 for February from -55.6 the previous month
The latest consumer inflation data also recorded an annual rate of 2.4% which is a high figure by the standards of Switzerland.
As well as the rate decision, the updated growth and inflation forecasts for the current year will also be watched closely.
Overall, the most likely outcome is that the bank will leave interest rates on hold and the franc will lose some ground is there is a significant downward adjustment to growth forecasts. The bank may also tae the opportunity to warn against excessive franc strength.
There is a small possibility of an interest rate cut which would weaken the Swiss currency sharply.
