The Swiss central bank will likely keep its key interest rate near zero to help battle the risk of deflation. From Bloomberg…

The Swiss National Bank, led by Jean-Pierre Roth, will leave the three-month Libor target at 0.25 percent at today’s quarterly monetary policy assessment, according to all 21 economists in a Bloomberg News survey. The SNB publishes the decision in Zurich at 2 p.m., when it will also release a policy statement.

Switzerland’s worst economic slump in three decades has been compounded by the strength of the Swiss franc, which has fueled the risk of deflation by making imports cheaper. In March, the SNB started buying corporate bonds and foreign currencies in a bid to weaken the franc and prop up consumer prices, which it predicts will fall 0.5 percent this year.

“The specter of deflation hasn’t been banished yet,” said Martin Gueth, an economist at Landesbank Baden-Wuerttemberg in Stuttgart. “The SNB will still be on its guard, although it has made some progress.”

The economy, the eighth largest in Europe, has been contracting since the third quarter of last year as the global recession curbs demand for exports, which account for about half of Swiss gross domestic product. GDP dropped 0.3 percent in the second quarter after plunging 0.9 percent in the first.

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