The Bank of Taiwan (臺灣銀行), the nation’s biggest state-run bank, will cut interest rates on Monday after the central bank cut its benchmark interest rates on Thursday. Other major state-run commercial lenders are expected to follow suit next week.
The bank will lower the interest rate on various time deposits and time savings deposits by between 0.1 percentage points and 0.39 percentage points in response to the central bank’s move, it said in a statement on its Web site.
The rate cuts also reflect the funding conditions on the market and market competition, it added.
Following in the footsteps of other central banks’ interest rate cuts earlier this week to stem the global financial crisis, the nation’s central bank announced on Thursday it would lower its discount rate by 25 basis points to 3.25 percent, effective immediately. This was the second cut in two weeks as the central bank aimed to offer local banks with cheaper 10-day loans.
At the same time, on its open market operations, the central bank also lowered the rates for the 30-day, 91-day and 182-day negotiable certificates of deposit (NCD) by 10 basis points to 1.97 percent, 2.06 percent and 2.16 percent, respectively, which allowed room for commercial lenders to cut their rates for customers.
Under the new adjustment, the Bank of Taiwan rates for one-year time deposits and time savings deposits would drop to 2.55 percent and 2.575 percent, respectively, the statement showed.
On Sept. 26, the central bank began lowering its discount rate by 0.125 percentage points after 16 consecutive quarterly rises to boost the domestic economy amid easing inflation.
The central bank will likely face further pressure to cut interest rates, a Standard Chartered Bank (Taiwan) economist projected yesterday.
“We see more interest rate cuts in the pipeline, possibly of 25 basis points each — instead of the previous projected 12.5 basis points — given still-fluid market conditions,” Tony Phoo (符銘財), the chief economist of Standard Chartered Bank (Taiwan) Ltd, wrote in a report released yesterday.
This would bring the central bank’s benchmark discount rate to 3 percent by the end of this year and down further to 2.25 percent by the end of next year, Phoo said.
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