The European Central Bank (ECB) cut rates on Thursday to a record low and said it would follow the Bank of England in launching a process of “quantitative easing” in a desperate bid to pull the eurozone’s stricken economy out of recession.
The bank shaved a quarter point (25 basis points) off its main interest rate, taking it to 1 percent. This is the seventh time it has reduced rates since October, when they stood at 4.25 percent.
It also announced that it would pump 60 billion euros (US$80.4 billion) into the 16-nation economy through buying “covered” bonds. These are primarily corporate bonds, but holders have access to assets that secure or “cover” the bond if the company that issues them becomes insolvent.
ECB policymakers have spent months arguing about whether to follow Britain and the US in battling the global downturn through purchasing assets. The Bank of England, though, has concentrated on buying government, rather than corporate, bonds. The Frankfurt-based ECB also said it would extend the period under which it lends banks unlimited funds from six months to a year.
Howard Archer, chief European and UK economist at IHS Global Insight, said: “The fact that the ECB felt compelled to take this wide-ranging action highlights the fact that the eurozone economy remains in serious trouble, despite some recent signs that the rate of economic decline is moderating.
“We suspect that the actual recovery still remains some way away and relapses are a very serious risk. Consequently, we expect the ECB to keep interest rates down at 1 percent until well into 2010.”
The Central Weather Administration (CWA) yesterday said it expected to issue a sea warning for Typhoon Fung-Wong tomorrow, which it said would possibly make landfall near central Taiwan. As of 2am yesterday, Fung-Wong was about 1,760km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point, moving west-northwest at 26kph. It is forecast to reach Luzon in the northern Philippines by tomorrow, the CWA said. After entering the South China Sea, Typhoon Fung-Wong is likely to turn northward toward Taiwan, CWA forecaster Chang Chun-yao (張峻堯) said, adding that it would likely make landfall near central Taiwan. The CWA expects to issue a land
Taiwan’s exports soared to an all-time high of US$61.8 billion last month, surging 49.7 percent from a year earlier, as the global frenzy for artificial intelligence (AI) applications and new consumer electronics powered shipments of high-tech goods, the Ministry of Finance said yesterday. It was the first time exports had exceeded the US$60 billion mark, fueled by the global boom in AI development that has significantly boosted Taiwanese companies across the international supply chain, Department of Statistics Director-General Beatrice Tsai (蔡美娜) told a media briefing. “There is a consensus among major AI players that the upcycle is still in its early stage,”
The Central Weather Administration (CWA) yesterday said it is expected to issue a sea warning for Typhoon Fung-wong this afternoon and a land warning tomorrow. As of 1pm, the storm was about 1,070km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point, and was moving west-northwest at 28 to 32kph, according to CWA data. The storm had a radius of 250km, with maximum sustained winds of 173kph and gusts reaching 209kph, the CWA added. The storm is forecast to pass near Luzon in the Philippines before entering the South China Sea and potentially turning northward toward Taiwan, the CWA said. CWA forecaster Chang Chun-yao (張峻堯) said
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