The nation's three state-run banks lowered interest rates for deposit accounts on Friday, bringing the rate for checking accounts to a record low of 0.8 percent.
The lower rates take effect tomorrow at Bank of Taiwan (台銀), Land Bank of Taiwan (土銀) and Taiwan Cooperative Bank (合庫).
The move comes after the central bank on Thursday cut the rediscount rate, charged to commercial lenders for 10-day loans, by 0.25 percentage points to 1.875 percent. At the three state-run banks, depositors will earn just 1.6 percent to 1.7 percent annually on savings accounts. The rate for one-year term deposits is 2.125 percent.
Friday's move was followed by several commercial banks, including Sunny Commercial Bank (陽信商銀), Chinese Bank (中華銀行) and Pan Asia Bank (泛亞銀行).
"The central bank interest-rate cut is the result of the economic downturn and excessive money-supply growth following an inflow of foreign capital into the country," Lii Sheng-yann (李勝彥), president of Bank of Taiwan, told the Taipei Times yesterday.
The Bank of Taiwan has also decided to lower lending rates for home loans from 5 percent to 4.7 percent, taking effect tomorrow. "The bank's lending rate of 4.7 percent will be the lowest among all local banks," Lii said.
Wei Chi-lin (魏啟林), chairman of the Land Bank of Taiwan, said the bank hasn't yet decided whether to cut lending rates.
"We'll have to discuss the matter with the Bank of Taiwan first before reaching a final decision," Wei said.
According to local media, the nation's Postal Remittances and Savings Bank (郵匯局) is also expected to cut mortgage rates from 3.1 percent to below 3 percent. That should benefit at least 200,000 borrowers who have taken out home loans under a government-sponsored program.
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