SNB Cut 3-Month Target Rate by 100 bp to 1.00%

The SNB cut the target range for 3m Libor by 100 bp to 0.5-1.5% in another inter-meeting move. The SNB said in a statement that as a result of price falls to oil and raw materials, inflation is likely to fall below 2% as early as at the end of this year. The central bank also sees a higher risk of a marked slowdown to Swiss economic activity next year. This is the SNB's third consecutive inter-meeting move, having cut rates by 25 bp on October 8 and by 50 bp on November 6.

Meanwhile, Swiss Franc (CHF) headed lower after surprise SNB 100 bp rate cut. EUR-CHF moved up to 1.5274 highs and USD-CHF recorded new trend highs of 1.2181 and remains bid. The SNB said as a result of the decline in prices of raw materials and oil, price stability will be restored soon than expected. SNB said inflation was likely to fall below 2% as early as the end of this year and there is a higher risk of a marked slow down in economic activity in Switzerland next year. The SNB said it will continue to monitor closely the situation on the money and foreign exchange market.

DailyFX

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