MNI STATE OF PLAY: SNB On Hold; Growth Nears Pre-Crisis Level

The Swiss National Bank is expected to leave its policy rate at -0.75% when it meets Thursday, and to repeat its commitment to step into the foreign exchange market as necessary for so long as CHF continues to be "highly valued."

Chairman Thomas Jordan may be absent as he continues to recover from undergoing heart surgery in August, leaving Fritz Zurbruegg and Andréa Maechler to present the latest round of growth and inflation projections.

Modest improvement in the economic outlook will not be enough to warrant a change in policy. Instead, Zurbruegg could repeat elements of a recent speech concerning the dangers to financial stability posed by recent developments in the Swiss mortgage and real estate markets. Press conference questions may focus on the significance for the SNB of debates surrounding Fed tapering and the European Central Bank's recalibration of its pandemic asset purchase programme.

June's inflation forecast was slightly higher compared with that of March, standing at 0.4% for 2021, and 0.6% for both 2022 and 2023, while there was an upward revision of GDP growth - to 3.5% for 2021 - attributed to the lower-than-expected decline in GDP in Q1 - compared with the previous forecast round. August's 0.9% inflation print and 1.8% Q2 growth point towards a continued strong recovery from the Covid-19 pandemic, with GDP likely to return to its pre-crisis level in Q3.