By John Revill
ZURICH (Reuters) - The Swiss National Bank will keep interest rates on hold and may stick to its description of the franc as "highly valued" next week despite a brighter economic outlook and recent weakening of the currency, a Reuters poll found.
The SNB will keep its target range for the benchmark three-month London Interbank Offered Rate at -1.25 to -0.25 percent, according to all 28 analysts surveyed by Reuters.
None of the respondents see any move on rates until September 2018. Their median outlooks suggest the bank will leave them unchanged through the forecast horizon running until June 2019.
They also expect the central bank to maintain its interest rate on sight deposits at -0.75 percent at its Dec. 14 update.
Both measures, designed to ward off cashflows into the safe-haven franc, have been frozen since January 2015, when the SNB upended currency markets by unexpectedly scrapping its peg of 1.20 francs to the euro (EURCHF=). The currency has weakened from 1.072 francs to the euro at the start of the year to nearly 1.17 this month.
The Swiss economy grew 1.2 percent year on year in the third quarter, accelerating from a weak second quarter as manufacturing and exports picked up.
Despite the franc's weakening, most analysts expect the SNB to stick to its assessment that the currency is "highly valued" next week, the poll showed.
In recent weeks, the SNB has been keen to stress the fragility of the franc situation, with Vice Chairman Fritz Zurbruegg last week saying the currency was still vulnerable to safe-haven pressures.
Most analysts expected the central bank to stay on hold until the European Central Bank makes its own move to raise interest rates.
"The franc is still too high for the SNB to be comfortable with increasing interest rates before the ECB does," said Credit Suisse (SIX:CSGN) economist Maxime Botteron.
Rasmus Gudum-Sessingo, a senior economist at Handelsbanken, said he also expected SNB policy to shadow the ECB, although the Swiss could eventually raise interest rates at a faster rate.
"But at present the SNB will be quite neutral – they have seen the franc weakening so don't want to disturb that," he said. "They will want to be boring and not draw any attention to themselves."
(Polling by Sujith Pai; Editing by Hugh Lawson) OLUSECON Reuters US Online Report Economy 20171207T134432+0000