On Wednesday just before the start of the business day, the SNB narrowed its target range for the three-month Libor rate to "as close to zero as possible," bringing it down to 0.00-0.25 percent from 0.00-0.75.
The bank will also increase the supply of francs to money market over the coming days.
“The current strength of the Swiss franc is threatening the development of the economy and increasing the downside risks to price stability in Switzerland,” the SNB said in a statement from Zurich today.
The franc has been seen as a safe haven as the euro debt crisis continues to simmer and the worries over US creditworthiness have grown in the face of the debate in Washington over the debt ceiling. The Swiss currency has continued to hit record highs against the euro and the dollar.
The SNB has come under increasing pressure by business leaders to take action.
On Wednesday, it said it “is keeping a close watch on developments on the foreign-exchange market and will take further measures against the strength of the Swiss franc if necessary.”
After the rate cut was announced, the franc retreated from its record high during Wednesday morning trading.