Swiss National Bank slashes interest rate

Switerland’s central bank today cut its rate of interest to 0.5%, the fourth consecutive rate cut in three months, and a four year low.

The Swiss National Bank (SNB) also warned that the oncoming recession facing the Swiss economy will be the worst since 1982.

Deterioration on global economic markets and in the international finance sector will have a significant impact on the Swiss economy, the bank said in a statement.

Slowdown in the world’s major economies, including the US, Europe and emerging markets, are already impacting Swiss exports, said Jean-Pierre Roth, chairman of the SNB’s governing board.

Switerland’s GDP is expected to see negative growth next year of between minus 0.5 and minus 1.0 percent, said the bank.

The country’s unemployment rate is antipated to rise between 3.5 and 4 percentage points from its current level of 2.5%.

Meanwhile, inflation is expected to drop to 0.9% in 2009, and 0.5% in 2010.

The SNB believes that this improvement in inflation offers ‘room for manoeuvre’ which it will put to ‘decisive’ use.

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