* Rates to rise once economic growth recovers
* No negative policy rates
* UBS, CS imposed negative rates on banks' franc deposits
* SNB's priority to keep lid on strong franc
ZURICH, Feb 5 Swiss National Bank board member
Fritz Zurbruegg expects interest rates to start moving up again
once economic growth recovers, ruling out a move into negative
"We will be moving up as soon as economic fundamentals come
to bear," Zurbruegg told a conference in Zurich. "Once we get
economic growth going we're going to see things normalise."
"This upturn could take a bit longer than some people would
wish," he said, noting that there were still significant output
gaps in large economies. "We do not see imminent inflation
pressures despite very large liquidity in the system."
Zurbruegg said the SNB would not push rates into negative
territory even after UBS and Credit Suisse
said in December they would levy temporary fees and negative
interest rates on other banks holding franc deposits.
"Negative interest rates in terms of policy rates are
definitely not on the cards in Switzerland," he said, adding
that the UBS and Credit Suisse move was "a logical business
decision from their point of view".
The SNB kept rates at rock-bottom levels at its last
monetary policy meeting in December, stressing its priority is
to prevent the Swiss franc from appreciating after it capped the
safe-haven currency at 1.20 francs per euro in 2011.
SNB chairman Thomas Jordan said last month the central bank
continues to keep all monetary policy tools at the ready to keep
the still strong franc in check.
Last year, SNB Vice Chairman Jean-Pierre Danthine stoked
speculation that the central bank might move to negative rates
citing Sweden's experience as evidence they could help.
Swiss officials also said last year they could consider
imposing capital controls - such as negative rates on offshore
deposits - to deter a new influx of hot money should the euro
zone crisis worsen, but most economists see that as unlikely.
The SNB, which imposed the 1.20 limit on the franc to
prevent a recession and deflation, had to intervene heavily last
year to defend the limit, swelling foreign exchange reserves to
72 percent of national output.
But it has done less since September as a bond buying
programme announced by the European Central Bank has paved the
way for a calmer tone on financial markets.
The franc had stuck tight to the 1.20 limit since 2011, but
it weakened past 1.25 last month as confidence returned to the
euro zone, although the currency traded firmer again this week
as concerns resurfaced.
"We're not out of the woods yet," Zurbruegg said, adding
the SNB remained committed to ensuring low and stable inflation
and said the big challenge for central banks like the SNB was
choosing the right movement to end expansionary policy.