* Swiss c.banker says downward risk for economy prevails
* SNB's Jordan says decisive policy action essential
* SNB's Roth says to stem franc rise resolutely to avoid deflation
* Swiss franc briefly falls on comments
* Research institutes see longer recession
(adds Roth comments, updates Swiss franc)
By Sven Egenter
ZURICH, May 6 (Reuters) - The Swiss National Bank will continue to fight the threat of deflation, using all means including currency interventions, as risks to the economy prevail, SNB board member Thomas Jordan said on Wednesday.
SNB Chairman Jean-Pierre Roth also emphasised in a speech the SNB's commitment to stem a rise in the franc, saying that the central bank would pursue its intervention strategy resolutely as long as deflation risks persisted.
Jordan said drastic steps taken by the SNB in March have had the desired effects as money market tensions ease, credit spreads tighten and the currency intervention has helped to stem the Swiss franc's rise against the euro and reduced volatility.
However, the central bank could not sit back despite first signs of economic stabilisation elsewhere as Switzerland was facing the worst recession since 1975, Jordan said in a speech due for delivery at a business event.
The Swiss franc pared gains after the SNB comments, though the effect remained limited and the currency traded nearly unchanged on the day at 1.5090 per euro by 1626 GMT.
"From a Swiss perspective, the downward risks are still prevailing at the moment," Jordan said, citing the danger of protracted recession, lasting deflation or a massive tightening of credit conditions. "Against this backdrop decisive monetary policy action is essential."
RECESSION
The global recession has hit the export-oriented Swiss economy hard. Jordan repeated the SNB's forecast that the economy will contract by up to 3 percent this year and prices will fall by 0.5 percent.
"In 2010 we expect a slight recovery," he said, adding that inflation rates should stay close to zero in 2010 and 2011.
Analysts said his comments indicated that the SNB was likely to stick to its ultra-loose monetary policy for quite a while.
"Jordan is signalling that at the moment he expects unconventional measures such as currency purchases to remain in play throughout 2009," 4Cast analyst Saara Tuuli said.
"The growth picture for 2010 is looking more optimistic though, which means the SNB may be able to move from zero interest rate policy in 2010," she said.
The Crea institute of the University of Lausanne, one of Switzerland's leading economic research institutions, took a more pessimistic view than the SNB, expecting the economy to shrink 3.2 percent in 2009 and by 0.8 percent in 2010.
"It will not be until 2011 that we see a timid recovery," the Crea economists said.
The KOF institute said its quarterly survey also showed that the recession had deepened. Especially manufacturers and banks reported a sharp drop in output. Capacity utilisation of industry dropped to 78 percent, the lowest since the mid-1970s.
EFFECTIVE
On March 12, the SNB cut its target for the 3-month Swiss franc LIBOR to a record low of 0.25 percent, intervened in the foreign exchange market and said it would buy corporate bonds.
Jordan said a first assessment showed that the measures were having the desired effect.
"We continue to monitor the development on the foreign exchange market intensively," he said. "We will implement our policy with all means at our hands and will act decisively against an appreciation of the franc versus the euro."
The franc has crept back up against the euro since the SNB's intervention, slowly approaching a level of 1.50 per euro, which many analysts see as the SNB's pain-threshold.
(Reporting by Sven Egenter, editing by David Stamp/Victoria Main)