TAIPEI: Taiwan’s central bank lowered its key interest rate for the first time in four years Thursday to stimulate the slowing economy in the wake of sluggish demand from abroad.
Following the cut, announced after a much anticipated quarterly board meeting of the central bank, the discount rate was lowered from 1.875 percent to 1.75 percent.
The reduction of rates—the first for 16 quarters, since June 2011—comes amid calls for substantial steps to lend a hand to the export sector, which is the major engine of the economy.
“Considering the slow recovery of the global economy and uncertainties facing it, slow domestic economic growth, negative export output, mild inflation and relatively high substantial rates, the board believed that lowering the discount rate should help the economy grow while maintaining domestic prices and banking stability,” the central bank said in a statement.
Taiwan in August slashed its growth forecast for 2015 to lower-than-expected 1.56 percent, saying the economy was losing strength due to weak demand from abroad and stiffer competition from China in the tech sector.
The figure marked a steep fall of 1.72 percentage points from May when the Directorate General of Budget, Accounting and Statistics made the previous estimate.
Traditionally an export-driven technology hub, Taiwan has benefited from Apple’s new iPhone6, launched last year. A number of leading Taiwanese firms such as Foxconn and TSMC are reportedly among Apple’s suppliers.
But China, which used to rely on supplies of Taiwan-made parts and materials, has been pushing to grow its own tech industry with the development of domestic smartphone brands and homegrown hardware, including chips.
The OECD earlier this month cut its world growth forecast for this year to 3.0 percent, trimming 0.1 percentage points off its previous estimate made in June. AFP