* Moderately optimistic on economy but lots of uncertainty
* Will resolutely prevent excessive rise in franc
* Residual deflation risks continue
* Welcomes Obama plans on curbing bank risk
* Franc falls 0.3 pct vs euro
(Adds detail on SNB policy, regulation, updates franc)
By Sam Cage
ZURICH, Jan 22 (Reuters) - Raising interest rates would be inappropriate for the moment and the Swiss National Bank will continue to prevent any excessive rise in the Swiss franc, the head of the central bank was quoted as saying on Friday.
The SNB has a moderately optimistic outlook for the Swiss economy but plenty of uncertainties remain, making it too early to start tightening monetary policy, SNB Chairman Philipp Hildebrand told the Wall Street Journal.
"What we do know is that at the moment certainly raising interest rates would be inappropriate," Hildebrand said.
"Our policy is clear: we will resolutely prevent an excessive appreciation as long as there are deflationary risks."
Switzerland emerged from recession in the third quarter of last year, and the SNB forecasts growth of 0.5 to 1.0 percent for 2010 and inflation of 0.5 percent.
Keeping the franc from appreciating against the euro is one way the SNB can fight recession and stave off deflationary pressures and in December it relaxed the intervention policy it launched in March 2009.
The central bank said at its Dec 10. meeting it would prevent an excessive rise of the franc rather than any rise and the franc has since risen steadily.
Hildebrand also told the WSJ he welcomed plans by U.S.
President Barack Obama to curb risk-taking activities by banks
and reiterated the SNB was not planing to sell a fund of risky
assets back to Swiss bank UBS
ZERO RATE POLICY
Most economists expect the Swiss central bank to start raising rates in the second half of 2010 and markets price in a first small hike by September.<0#FES:>
The franc fell after Hildebrand's comments and was down 0.3
percent against the euro compared with Thursday's New York close
at 1.472 per euro by 1640 GMT.
Although the SNB is unwinding some of its unconventional measures, it has cautioned that the recovery remains fragile.
"We continue to have considerable residual deflation risks, particularly in the event that we were to be hit by a renewed shock of some sort, and clearly the exchange rate shock would be one that would be particularly damaging regarding deflation risks," Hildebrand said.
"We are equally committed to preventing deflation as we are to preventing inflation," he said. "We have used the interest rate mechanism all the way. We are obviously at a zero rate policy."
The SNB will watch inflation indicators and forecasts carefully to determine when it will raise rates, Hildebrand added. (Editing by Ron Askew)