Swiss National Bank Cuts 3-Month LIBOR Rate By 100bp To Meet 2% Target for Inflation

The Swiss National Bank surprised the markets for the third time as the central bank unexpectedly lowered the 3-month LIBOR target rate by 100bp to 0.50-1.50 as fears of deflation intensified. The SNB stated that they expect inflation to fall below the 2% target by the end of the year, and noted that the intermeeting move was necessary in order to restore price stability sooner rather than later. The preemptive move by the central bank suggests that the dramatic fall in raw materials paired with the slowdown in the economy have spurred deflation concerns, and policymakers may ease policy further over the coming months as they anticipate economic activity to remain subdued well into the next year.

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