Taiwan’s interest rates at a 26 year low

Taiwan’s central bank has lowered interest rates indicating the main reason fro the move being to reduce inflationary pressures and to cut the main threat economic growth according to the statement of its website.

The central bank cut the rate from 3.125 percent to 2.375 percent, and represents the fifth reduction in just 2 months as exports are stuttering hence the lowest rate in 26 years.

The Central Bank of the Republic of China has cut the discount rate on 10-day loans for banks to just 2 percent, although the size of the reduction is what has shocked analysts in a desperate bit to cut borrowing costs and get the economy moving again.

The bank’s Governor Perng Fai-nan reduced borrowing costs starting at the end of September and the government has forecast that the island will fall into recession for the first time in over seven years.

According to Tony Phoo from Standard Chartered Bank the government needed to move mush faster and more aggressively when using monetary policy in order to avoid the recession.

Inflationary pressure has reduced but the problem is that economic decline remains high as exports which are the main driver for growth have fallen for three consecutive months.

It is hoped that by loosening monetary policy domestic consumption will increase.

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