The central bank yesterday lowered key interest rates by 75 basis points, the biggest cut in 26 years, in a bid to address the economic downturn and ease the financial burden on companies and home owners.
Central bank Governor Perng Fai-nan (彭淮南) told a news conference that the bank’s board would reduce the discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral to 2 percent, 2.375 percent and 4.25 percent respectively.
The cut, the fifth in two-and-a-half months and the biggest since December 1982, will take effect today, Perng said, attributing the decision to weaker-than-expected exports.
“Downside risks heightened, as shown by the sharp decline in exports last month,” Perng said. “The trend will crimp industrial output, investment plans, consumer spending and other economic activity.”
Outbound shipments, the mainstay of the nation’s economic growth, contracted for a third month last month by 23.3 percent, with China-bound goods plunging a record 38.5 percent.
The regulator voiced concern about rising unemployment, unpaid leave and other belt-tightening measures by companies, saying they would hamper efforts to combat recession.
To address that, the central bank has cut rates by 1.625 percentage points since late September. Perng said the agency would maintain loose monetary policy and convene board meetings as frequently as necessary.
Perng said he understood the rate cuts were draining incomes of people with bank savings and asked the public to put the economy ahead of personal gain.
Real estate agency Evertrust Rehouse (永慶房屋) said households with a NT$5 million (US$149,000) mortgage could save about NT$37,500 on their annual interest payments following the latest cut.
Perng dismissed concern about deflation, adding that the GDP was forecast to grow in the second quarter of next year, while the yearly consumer price is expected to rise 0.37 percent.
The central bank also set the target money supply range, or M2, at between 2.5 percent and 6.5 percent for next year.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), said the cut showed the economy was in worse shape than the government was willing to admit.
"It will be very difficult, if not impossible, for the economy to recover in the second quarter of next year,” Liang said by telephone. “It makes more sense to expect growth in the third quarter if the government carries out the stimulus package effectively.”
The economist said the central bank may announce more rate cuts in the near future if key economic pointers such as export, industrial output and jobless figures continue to slump.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
REGIONAL STABILITY: Taipei thanked the Biden administration for authorizing its 16th sale of military goods and services to uphold Taiwan’s defense and safety The US Department of State has approved the sale of US$228 million of military goods and services to Taiwan, the US Department of Defense said on Monday. The state department “made a determination approving a possible Foreign Military Sale” to the Taipei Economic and Cultural Representative Office in the US for “return, repair and reshipment of spare parts and related equipment,” the defense department’s Defense Security Cooperation Agency said in a news release. Taiwan had requested the purchase of items and services which include the “return, repair and reshipment of classified and unclassified spare parts for aircraft and related equipment; US Government
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from