Swiss economy, on the verge of its first recession in six years. Thanks, franc!

Tomas Jordan, President of the Swiss National Bank, has little room for maneuver now that Switzerland's economy is on the verge of its first recession in more that six years.

The Swiss National Bank is to announce its Libor rate and publish its monetary policy assessment on Thursday. While economists estimate there will be no policy change, policy makers are likely to caution they can do more if the outlook gets worse as he considers the threats from the crisis in Greece and the potential breakup of the euro area.

The bank cannot cut rates without risking a run on cash and its limit is possibly minus 1 percent, as Bloomberg reports. Its current deposit rate is already at record low of -0.75 percent.

To date, SNB officials have indicated that they have seen little evidence of cash hoarding, and that piling up cash in vaults to circumvent the negative deposit rate would have high costs, Bloomberg says.

After the SNB allowed the Swiss franc to float freely around six months ago, the economy was shrinking having seen a contraction of 0.2 percent in the first quarter 2015, which ended 13 quarters of continuous expansion.

At the moment, the central bank expects growth of 0.9 percent this year, half what it projected when the ceiling on the franc of 1.20 per euro was still in place. According to its estimates, consumer prices will fall 1.1 percent in 2015, with the yearly inflation rate turning positive again only in 2017. The franc’s 15 percent appreciation against the euro this year is the main reason for the weak rate of inflation.

In May, the prices of imported goods fell 9.9 percent in comparison with 2014, as data issued Monday showed.

Greece's crisis may put the Swiss economy under further pressure. Worries about the euro area falling apart in 2011 made the SNB establish its cap on the franc, to protect the economy from the effects of shelter buying.

As Bloomberg reports, any change to the SNB’s deposit rate would almost certainly also mean a change to its target range for three-month Libor, currently at between minus 1.25 percent and minus 0.25 percent.