The Swiss National Bank (SNB) has slashed 100 basis points off its target range for the three-month Swiss franc Libor to 0.50-1.50 per cent.
Thursday's surprise cut to the London Interbank Offered Rate 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.
The cut followed a 50 basis point cut earlier in November and 25 basis points in October. Before this month, the Swiss central bank had reduced its rates only once in the past five-and-a-half years.
Despite the move Swiss markets endured another bad day, with the Swiss Market Index of leading blue-chip companies dropping in afternoon trading to 5,172 points – its lowest since summer 2003 – before closing at 5,306, down 3.95 per cent on Wednesday.
Financial institutions were once again the biggest losers, with Credit Suisse shares depreciating by 9.78 per cent and UBS's by 6.38 per cent. UBS shares reached another record low during trading of SFr10.67 ($8.75).