* Cbank chief says rate path "reasonable"
* Sees record low 0.25 pct rate for "quite a while"
* Says exit from extraordinary support simple in Sweden
(Adds quotes, details)
By Rachel Armstrong and Mia Shanley
GOTHENBURG, Sweden, Sept 30 (Reuters) - Sweden's central bank chief defended the Riksbank's plan to keep its key rate at a record low over the coming year and said it was "reasonable" given the country's low inflation and large output gap.
The central bank forecasts it will keep interest rates at 0.25 percent for a year more to revive a battered economy, but many analysts believe it will need to raise rates sooner due to a faster-than-expected recovery. [ID:nL3392748]
"Given what is going on in the Swedish economy, given the low inflation and the very large output gap, we find it reasonable to project interest rates in this way," Riksbank Governor Stefan Ingves said in a Reuters interview at a Eurofi conference on Sweden's west coast.
Some analysts have warned ultra-loose monetary policy runs the risk of creating excessive credit growth and a housing bubble but the central bank has so far played down such fears.
When asked if there were risks in keeping rates so low for such a long period, Ingves said: "Not under the present circumstances. There would be many, many more risks if the rates were not at this present level."
Two Swedish central bank board members want the Riksbank to start hiking rates as soon as the spring or early summer of next year as they expect the recovery might be stronger than anticipated, minutes from the central bank's latest meeting showed this month.
Ingves said it was natural to have this kind of debate when rates were at their lowest levels since records began in 1907, but that this was the Riksbank's overall view for now given the state of the economy.
"We do believe this is the rate that we need to hold for quite a while in order to both meet our inflation target and support general economic development in the Swedish economy."
EASY EXIT
Sweden's central bank made history in July when it introduced the world's first official negative interest rate for banks' deposits, though Ingves said the move may have attracted more attention than warranted.
"It's proving that it's possible to do it this particular way, but when it comes to how monetary policy is actually designed, it doesn't really matter," he said
In reality, only a tiny fraction of overnight deposits at the central bank led to it actually charging interest rather than paying it.
"What really matters is the policy rate which is 0.25 percent," he said. "Being a small, open economy, we are highly dependent on what happens in the rest of the world ... It will take several years until we get back to something which is what we consider to be normal."
The Swedish central banker has long experience with financial crises and, as Director General of the Swedish Bank Support Authority, was a key player in resolving a domestic banking crash in the early 1990s.
"On the one hand the worst is behind us, but on the other hand it will still take quite a while before we can move into what we call normal conditions," he said.
Ingves said Swedish policymakers had been discussing exit strategies for policies put in place when the financial crisis struck, but he gave no timeline.
The Riksbank has offered banks at least 200 billion crowns in ultra-cheap loans to financial institutions to encourage lending and help the country climb out of its worst recession in more than half a century.
He said implementing any exit strategy would be straight forward for the Riksbank.
"The exit is very simple because when the loans that we have presently outstanding mature, our balance sheet will shrink on both sides," he said.
"From a technical point of view, there's not much engineering ... we are in a quite good position in terms of the daily running of the business."
(Reporting by Rachel Armstrong and Mia Shanley, editing by Mike Peacock)