Taiwan Cuts Interest Rates for 4th Time in Two Months

By Chinmei Sung and Yu-huay Sun

Nov. 9 (Bloomberg) -- Taiwan's central bank lowered its benchmark interest rate for the fourth time in two months, adding to a series of cuts in the U.S., Europe and Asia aimed at preventing a prolonged global recession.

The Central Bank of the Republic of China (Taiwan) reduced the discount rate on 10-day loans to banks to 2.75 percent from 3 percent effective tomorrow, Governor Perng Fai-nan said at a press conference in Taipei today. Today's move follows two similar-sized reductions last month and a 0.125 percentage point cut announced Sept. 25.

All three cuts since the start of October have taken place outside of the bank's scheduled quarterly policy meetings. Government trade figures released late on Nov. 7 showed Taiwan's exports, which are equivalent to about half of the island's gross domestic product, dropped 8.3 percent from a year earlier last month, the biggest decline in more than three years.

``Rate cuts can help stimulate domestic demand, lifting economic growth,'' Perng told reporters. ``The central bank has no policy tool to help exports, but at least we can act to help the other portion of the economy, which is domestic demand.''

To contact the reporters on this story: Chinmei Sung in Taipei at csung4@bloomberg.net; Yu-huay Sun in Taipei ysun7@bloomberg.net