December 12, 2008	Friday	Zilhaj 13, 1429

ZURICH, Dec 11: Switzerland’s central bank slashed on Thursday its benchmark interest rate by half a percentage point to a range of zero to 1.0 per cent to boost an economy it now expects to be in recession next year.

A sharply deteriorating global economic environment and international financial markets will impact the Swiss economy significantly, it said as it announced the rate cut, its fourth consecutive reduction in three months.

“The Swiss National Bank projects that GDP growth will be negative next year, between (minus) 0.5 and (minus) 1.0 per cent,” the central bank said in a statement.

The key metals, machinery and electronics industry has already seen a sharp fall in new orders, the SNB head said, as the list of victims of the slowdown expands beyond the two major banks UBS and Credit Suisse.

Further losses at the two major banks, which have already posted billions of dollars in asset write downs, also cannot be ruled out, his deputy added.

The slowdown in the US, Europe and emerging markets are impacting Swiss exports, chairman of the SNB governing board Jean-Pierre Roth said.

“The worsening outlook for sales will lead to an adjustment of investment plans in Switzerland as well,” he said, adding that the resulting deterioration in business confidence would dampen job creation.

The outlook at the country’s two biggest banks UBS and Credit Suisse also looks gloomy.

Vice-chairman of the SNB governing board Philipp Hildebrand said that “further losses cannot be ruled out” at both even though measures taken by the government have had “a positive effect” on the banks’ position.

“The situation remains serious and the SNB will continue monitoring it closely together with the Swiss Federal Banking Commission and the Federal Department of Finance,” Hildebrand said.—AFP