The Swiss National Bank made a surprise cut in interest rates today, slashing 100 basis points off its target range for the three-month Swiss franc LIBOR to 0.50-1.5%.
The Libor rate is one of the most important benchmarks in the global financial system and is used as a base for many different types of loans over different periods.
The SNB said it would provide the Swiss franc money market with a generous and flexible supply of liquidity in order to bring the LIBOR down to the middle of the target range.
'International economic conditions have worsened appreciably, bringing a higher risk of a marked slowdown in economic activity in Switzerland next year,' it said.
'As a result of the decline in the prices of raw materials and oil, price stability will be restored sooner than expected,' it said, adding it expected inflation to fall below 2% as early as the end of this year.
The cut was the third within a month, following a 50 basis point cut earlier in November and 25 basis points in October.
