Swiss cut its interest rate by 1%

The Switzerland central bank today announced unprecedented a full percentage point of rate cut after economic outlook worsened. It’s the third rate cut since 2003 and the biggest single rate cut since November 6 when the central bank cut its interest rate by a half percentage points to 2%.

The central bank step has surprised analysts. Additionally, the central bank also offered 3-months and 6-months funding at 0.15%.

Switzerland government was threatening banks on November 18 to join the guarantee scheme after there was only one bank which joined the scheme since it was offered on November 4.

Kenneth Broux, an economist at Lloyds TSB Group Plc in London, feels there is a big question behind the central bank steps. He said, “To cut rates by that much in one go begs the question whether there's something we don't know”.

Swiss banking collapse could be one biggest domino to fall.

ETFs/Stocks :

iShares MSCI Switzerland Index Fund ETF (EWL)

Related Posts :

Swedish threatened to force banks to join $188bn guarantee scheme

Sources :

Bloomberg: SNB Cuts Benchmark Rate by a Record 100 Basis Points (Update2), November 20, 2008 07:58 EST

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