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Central bank cuts rates in effort to goose the economy

The nation's central bank said yesterday it would cut key interest rates from next week to support the faltering economy.

The discount rate and other key rates would be cut by 0.25 percentage points, the bank said in a statement. The discount rate will be cut to 3.25 percent, it said.

The rate cuts came after Directorate General of Budget, Accounting and Statistics said that economic growth in the second quarter shrank 2.35 percent -- the biggest quarterly fall in 26 years.

The agency also revised its economic growth forecast for this year to a decline of 0.37 percent.

The rate reduction, the eighth since December, was aimed at reviving the economy, a central bank official said.

"The move was considered necessary after the DGBAS announced that second-quarter GDP fell 2.35 percent from a year earlier," said Crystal Shih, the director-general of the bank's economic research department.
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