SNB sticks to expansive policy to tackle highly valued franc

BERN (Reuters) - The Swiss National Bank maintained its ultra-loose monetary policy stance on Thursday, saying it would keep its negative interest rates in place to combat the "highly valued" Swiss franc.

The SNB kept the target range for its benchmark three-month interest rate at minus 1.25 percent to minus 0.25 percent, in line with expectations of analysts polled by Reuters.

The SNB also maintained a negative interest rate of 0.75 percent on deposits of commercial banks at the national bank, a measure to reduce the allure of the Swiss franc for investors and to further relieve pressure on the safe-haven currency which has lost 8 percent against the euro this year.

"Since the last monetary policy assessment, the Swiss franc has weakened further against the euro and, more recently, has also depreciated against the U.S. dollar," the SNB said. "The overvaluation has thus continued to decrease, yet the franc remains highly valued."

While the depreciation of the franc shows safe havens lost some of their luster recently, the SNB called the development "fragile" and said its willingness to intervene in forex markets as well as keep a negative interest rate remained "essential".

The euro has gained against the franc this year as political uncertainties surrounding the common currency waned following the election of Emmanuel Macron in France.

The development has given a boost to the export-reliant Swiss economy, with the country's GDP accelerating in the third quarter on the back of manufacturing and export improvements.

The SNB raised slightly its GDP outlook for 2017, saying it now sees growth of 1 percent, compared with its previous view of just under 1 percent.

For 2018, the bank forecast economic growth of around 2 percent.

The central bank said it now expected an inflation rate of 0.5 percent in 2017, just up from the previous forecast of 0.4 percent in September.

It also raised its view for inflation in 2018 to 0.7 percent from 0.4 previously, but held its 2019 forecast steady at 1.1 percent.

(Reporting by John Revill, editing by John Miller)