The Swiss National Bank is ready to take further measures to weaken the Swiss franc if the economic outlook and deflationary development make it necessary, its chairman said on Sunday in a newspaper interview.

The franc is still highly valued versus the euro at the current exchange rate. We expect it to weaken further over time, Philipp Hildebrand was quoted as saying by Swiss Sunday newspaper NZZ am Sonntag.

If that was not the case, it could lead to deflationary trends and weigh strongly on the economy. If the economic outlook and the deflationary development make it necessary, we are ready to take further measures, he said.

Hildebrand had already made similar comments in an interview with a Polish newspaper at the end of October and SNB Board Member Jean-Pierre Danthine also insisted on the central bank's readiness to take action in a speech earlier this week.

The SNB introduced a lower boundary for the euro-franc exchange rate at 1.20 on September 6 and the franc has since been trading in a range between 1.20 and 1.25 per euro.

We see that our crystal clear policy when introducing the minimum exchange rate is seen as very credible, said Hildebrand, adding broad support for the measure had added to its credibility.

Asked whether the SNB could lift the minimum exchange rate to 1.30, Hildebrand, who was appointed vice-chairman of the Financial Stability Board this week, said: We monitor the data and will take further measures if needed.

Calls for the SNB to raise the franc cap have recently become louder as Switzerland's economy shows increasing signs of slowing down.

In a separate interview with Swiss newspaper SonntagsZeitung, Gerold Buehrer, chairman of business lobby economiesuisse, said the franc was still significantly overvalued.

I hope the central bank will raise the exchange rate target if the opportunity arises, he said, adding a balanced exchange rate would be between 1.30 and 1.40 francs per euro.

Buehrer said the SNB chose a very good moment for setting the franc cap on September 6, when huge short positions were in the market and might act again in a similar situation.

Hildebrand said in the interview with NZZ am Sonntag he expected Switzerland's economy to stagnate or even shrink slightly in the second half of 2011. In 2012, we should see very small growth rates in the best of cases.

(Reporting by Silke Koltrowitz; Editing by Ed Lane)