Tai­wan cuts rate for third straight meet­ing as ex­ports slump

The Pak Banker - - FRONT PAGE -

Tai­wan cut its bench­mark rate for a third con­sec­u­tive quar­ter as an ex­port slump showed no signs of re­cov­er­ing and has be­gun weigh­ing on the la­bor mar­ket.

The cen­tral bank low­ered the bench­mark dis­count rate by an­other 12.5 ba­sis points to 1.5 per­cent, it said in a state­ment Thurs­day in Taipei. Twenty-five of 26 econ­o­mists sur­veyed by Bloomberg had forecast a cut, with 22 ex­pect­ing the rate to reach 1.5 per­cent, three pre­dict­ing 1.375 per­cent and one ex­pect­ing no change.

The in­fla­tion outlook is steady and the do­mes­tic outlook is poised to im­prove, al­beit at a slow pace, the cen­tral bank said in the state­ment. Overseas in­flows have been strong amid low rates abroad, and pol­icy mak­ers will main­tain for­eign-ex­change mar­ket or­der in the event of ex­ces­sive volatil­ity, ac­cord­ing to the state­ment. Tai­wan also will ease rules on mort­gages.

Tai­wan's econ­omy is headed for a third con­sec­u­tive quar­ter of con­trac­tion as ship­ments shrank in the past 13 months amid a slow­down in China. The strong­est stock in­flows in Asia this year are buoy­ing the lo­cal dol­lar, threat­en­ing to put the is­land's ex­porters at a dis­ad­van­tage to ri­vals in South Korea. The weaker trade pic­ture also is weigh­ing on the la­bor mar­ket, rais­ing the risk that con­sump­tion will cool fur­ther as well. "The ef­fects of rate cuts are be­com­ing less and less ob­vi­ous, but it still needs to be done," Woods Chen, an econ­o­mist at Ta Chong Bank Ltd. in Taipei, said be­fore the an­nounce­ment.

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