In its March forecast, the Zurich-based KOF Institute said in an emailed stated that the Swiss economy will continue to strengthen this year and add more pressure on the Swiss National Bank (SNB) to shift to a tighter monetary policy.

According to their assessment, the economy will expand by 2.8% this year following the expansion of 2.6% in 2010. Growth will slow into 2012 as they project the economy to expand by 2.3%. They expected inflation to average 0.7% this year and rise to 1.2% in 2012. Unemployment is expected to continue to decline amid the recovery from the average 3.9% in 2.10 and to drop to 3.0% this year and 2.7% in 2012.

Another key projection for the Swiss economy is the expectations for the SNB to move on rates in the coming meeting. They said given the positive economic outlook the SNB might raise borrowing costs from 0.25% in the coming June assessment.