INSTANT VIEW: SNB cuts rates 100 bps in surprise move

ZURICH (Reuters) - Following are comments from economists after the Swiss National Bank made a surprise cut in interest rates on Thursday, slashing 100 basis points off its target range for the 3-month Swiss franc LIBOR to 0.50-1.50 percent.

The cut was the third within a month and came as the SNB said there was a higher risk of a marked slowdown in economic activity in Switzerland next year.

ECONOMISTS COMMENTS

Latest comment

JAN POSER, SARASIN

"We had expected them to cut to 0.5 percent but not before Q3 2009. This is completely unexpected. Its a bold move that the SNB must have deemed necessary.

"Their risk scenario must have become reality. At the last cut, they warned that there could be negative growth in 2009. This has probably become their best case scenario.

"They probably also thought why wait?

"Such a bold move sometimes also looks like a panic move and the SNB would want to avoid being perceived as being panicky but with markets now in panic mode, the SNB probably thought they would not exacerbate the situation and don't see a reason for waiting."

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NEIL MELLOR, CURRENCY STRATEGIST, BANK OF NEW YORK MELLON, LONDON

"I think we've gotten to the point where central banks have to entertain these types of measures. (But) there is growing doubt whether monetary policy can work in a debt deleveraging environment. And there are doubts whether fiscal policy can work in this environment."

"There's no confidence that any of these measures are going to work."

"The knee-jerk reaction has been to sell the Swissy for all the usual reasons, like declining yield.

"But if you step back, risk averion has enveloped the market again ... so the euro could fall again and the Swissie could rise."

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