GENEVA (AFP) - The Swiss central bank kept its key interest rate unchanged on Thursday in line with analysts expectations, as it raised its forecast for growth in the Swiss economy this year to about 2.0 percent. The Swiss National Bank (SNB) is maintaining its expansionary monetary policy, the central bank said in a statement. Consequently, it is leaving the target range for the three-month Libor unchanged at 0.00 to 0.75 percent, it added. The Swiss franc rose sharply, to 1.379 francs to the euro, close to a record high point reached on June 9. SNB president Philipp Hildebrand noted that the threat of deflation, which partly motivated recent intervention on foreign exchange markets, had largely disappeared. In March, the SNB had forecast economic growth of about 1.5 percent in Switzerland this year. However, the SNB added a note of caution on Thursday about renewed tensions on financial markets, due to concerns about huge public debt in several countries. Uncertainty has increased since the last monetary policy assessment, it noted. Should these downside risks materialise and, via an appreciation of the Swiss franc, lead to a renewed threat of deflation, the SNB would take all the measures necessary to ensure price stability, it added. The Swiss central bank has intervened in money markets in recent weeks as the Swiss franc surged to new highs against the weakening euro. In the past few month, foreign exchange purchases, in particular, have been an effective instrument for averting deflationary risks, said Hildebrand. Eurozone countries account for the biggest proportion of Swiss trade and are key to the countrys export dependent economy. But Hildebrand noted that although the euros decline had dampened exports, growing foreign demand had nonetheless supported Switzerlands trade flow. Since the last monetary policy assessment, the Swiss franc has appreciated against the euro. It has simultaneously depreciated against the US dollar, Hildebrand told journalists. As a result, the trade weighted external value of the Swiss franc has only slightly increased, he added. Hildebrand said the countrys foreign exchange reserves had quadrupled to more than 230 billion Swiss francs since the beginning of the financial crisis. The central bank raised its inflation forecast over the short term for Switzerland, reaching nearly one percent in the second quarter, but kept its longer term outlook for a gradual increase to 2.2 percent in 2012.