SNB Cuts 3-Month Libor Range by 50 bp to 1.50-2.50%

The SNB has cut its Libor target range by 50 bp to 1.50-2.50%. There was no policy decision scheduled today, but there had been speculation of a move as both BoE and ECB were expected to cut rates today. The SNB last cut in a coordinated move with other central bank. Unlike other central banks the SNB's main rate is not its lending rate, but the 3 months market rate and in the last step the bank lowered the target range for the Libor only by 25 bp, while promising to bring the actual rate down by 50 bp. This time it has lowered the target range by a full 50 bp. The bank said in a statement that the global economic outlook has deteriorated more severely than anticipated, which will have an impact on the Swiss economy. The slowdown, together with falling oil prices and the appreciation of the CHF mean lower inflation, according to the SNB, so that today's move "provides an impetus to economic activity, and will not jeopardize the return to price stability".

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