Unexpectedly Cuts Rates of SNB

The Swiss central bank unexpectedly cut its main lending rate by 50 basis points and said the economy may contract next year.
The central bank, led by Jean-Pierre Roth, lowered its three-month Libor target to 2 percent today from 2.5 percent, it said in a faxed statement from Zurich. The SNB wasn’t scheduled to decide on interest rates until December11.
The Bank of England today cut its main interest rate by 150 basis points as policy makers tried to keep the economy from tipping into recession.
Today’s action is the bank’s second inter-meeting cut in a month, as the financial market crisis causes stocks to plunge and forces governments to buy troubled assets. UBS AG, Switzerland’s biggest bank, got a $59.2 billion aid package Oct. 16 after piling up the biggest losses of any European lender from the global credit crisis.
The franc fell against the euro and dollar after the SNB’s announcement. The Swiss currency weakened to 1.5022 per euro by 1:13pm in Zurich. Against the dollar, the franc slipped to 1.1698 from 1.1580.