The central bank cut Taiwan's key interest rate by 25 basis points, the second time in the last two months in a move to stimulate domestic investment and consumer spending.
The bank cut the rediscount rate to 3.5 percent from 3.75 percent at its quarterly board meeting yesterday. The new rate applies to commercial lenders for 10-day loans.
The bank also cut the accommodations rate by 0.25 percentage points to 3.875 percent from 4.125 percent and the accommodations-without-collateral rate by 0.25 percentage points to 5.75 percent. The new rates are effective today.
With economic growth at just 1.06 percent in the first three months of 2001, exports of computers and mobile phones and the components used to make them fell, forcing manufacturers to cut production and investment.
Domestic spending is also down, curbed by falling share prices and rising unemployment.
The central bank made the move following a rate reduction by the US Federal Reserve to lower its benchmark interest rate by a quarter point to 3.75 percent, the sixth reduction this year.
Falling US rates reduce the risk that a Taiwan rate cut will prompt investors to move assets off Taiwan and into US dollars.
RSS