LONDON/ZURICH, June 22 (Reuters) - The Swiss National Bank raised its policy interest rate by 25 basis points on Thursday as the central bank pressed ahead with its campaign to dampen stubborn inflation and left the door open for more tightening.

But this did little to support the Swiss franc, which fell against the dollar and the euro, as traders had prepared for a larger increase on Thursday.

MARKET REACTION:

FOREX: The Swiss franc was last down 0.1% against the dollar , which was trading at 0.897 francs, having risen to as much as 0.8907 immediately after the decision.

The euro was last up 0.2% against the franc at 0.9827 francs.

STOCKS: Zurich's benchmark SSMI was down 0.6% on the day, led predominantly by declines in financial stocks, such as UBS, which fell 1.6% and insurer Swiss Life, which dipped 0.7%.

COMMENTS:

THOMAS GITZEL, CHIEF ECONOMIST, VP BANK GROUP, LIECHTENSTEIN:

"The SNB is sticking to its wording, according to which it cannot be ruled out that further interest rate hikes will be necessary. This is a relatively clear forward guidance for the SNB - a rate hike of 25 basis points should be all but certain in September."

"Unlike the ECB and the Fed, the SNB can proceed slowly and steadily with its monetary policy tightening. The inflation rate in Switzerland was most recently 2.2% and even 1.9% if the volatile energy and food prices (core rate) are factored out. With today's interest rate hikes, the key rate and the inflation rate are converging. An interest rate hike of 50 basis points was therefore not necessary."

KARSTEN JUNIUS, CHIEF ECONOMIST, BANK J. SAFRA SARASIN, ZURICH:

"The inflation projection is remarkable as 2024 and 2025 forecasts are revised up and remain above 2% due to second-round effects, higher rents, electricity prices and foreign inflation."

"I wonder whether the increase in the reference rate for mortgages was a surprise for the SNB and how many further hikes they have in the baseline of their forecasts with which effect on the rent inflation."

"The interest rate differential vs the euro is very high and a further widening risks a depreciation of the franc despite the advantage that it has very low inflation rates."

BRIAN MANDT, CHIEF ECONOMIST, LUZERNER KANTONALBANK, LUCERNE:

"The Swiss monetary watchdogs are consistently combating the risks of excessive inflation. That is why they raised the key interest rate from 1.5% to 1.75% at today's meeting. To restore a stable price environment, they are also relying on the currency.

"The strong franc helps to contain imported inflation. In this context, the goal of price stability will soon be reached, as the inflation rate in May was 2.2%, just above the SNB's comfort zone of 0 to 2%. This is probably one of the reasons why the central bankers have reduced the extent of the interest rate step from 0.5 percentage points in March to 0.25." (Reporting by Zurich Newsroom; Editing by Amanda Cooper and Harry Robertson)