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MW: Swiss National Bank makes surprise rate cut
 
By Steve Goldstein, MarketWatch


LONDON (MarketWatch) -- The Swiss National Bank on Thursday made a surprise and steep one percentage point rate cut, noting fading price pressures and a deteriorating world economy.
The Swiss National Bank said it's lowering its three-month Libor target range by one percentage point to a 0.5% to 1.5% range.
The move "will 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."
Price stability will be restored sooner than expected because of declines in the prices of raw materials and oil, and it noted international economic conditions have worsened appreciably.
It was the second unscheduled rate cut in a month by the central bank, and according to Citigroup analysts, the largest ever cut since adopting inflation targets at the end of 1999.

The SNB move sent the dollar up 0.7% to 1.2210 francs, and yields on Swiss government bonds tumbled.
The Swiss franc's drop is welcome relief for exporters in the country, as the currency, like the Japanese yen, has been a benefit of safe-haven flows.
The main Swiss SMI index (XX:SMI: news, chart, profile) briefly improved before skidding over 6% during the session.
The move in Switzerland comes as central banks across the globe prepare markets for further rate cuts, with expectations of another round of cuts in the U.S., the euro zone and Britain.
Dustin Reid, an analyst at RBS Global Banking & Markets in Chicago, nonetheless doesn't expect out-of-schedule rate cuts by other central banks.
"Of course, the speculation will now be that other major central banks will come in and ease rates inter-meeting as a result of the deteriorating global economic conditions and loss of confidence, but I do not believe that this will be the case," he said.
"We have already had inter-meeting rate cuts and a massive amount of liquidity injected into the market, and we still are where we are."
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