Taiwan cuts interest rates to new lows
TAIPEI (Reuters) - Taiwan cut key interest rates by 25 basis points to new lows on Wednesday, a widely anticipated move economists said was meant to boost domestic confidence to prevent further deterioration in the already flagging local economy.
The central bank has now trimmed 2.5 percentage points off interest rates in stages since last December, closely following the U.S. Federal Reserve which has cut interest rates 10 times this year, including Tuesday's half point cut.
"It is a confidence issue with the central bank," said Mike Moran, a regional treasury economist with Standard Chartered Bank based in Hong Kong. "It will take a lot more than interest rate cuts to boost the economy."
The latest rate cut would bring the island's discount rate to 2.25 percent, accommodation with collateral rate to 2.625 percent and accommodation without collateral rate to 4.5 percent, the bank said in a statement.
The bank also halved the reserve requirement ratio on foreign currency deposit to 2.5 percent, a move that economists said would reduce banks funding costs on such deposits and allow them to raise the interest paid to depositors.
"Rate cuts will help spur consumption and investment and reduce the burden on borrowers. But how big the effect will be depends on the external environment," said Chrystal Shih, head of the central bank's economic research department.
Before the September 11 attacks on America, Taiwan's government forecast gross domestic product (GDP) would fall 0.37 percent in 2001 -- which would be the first ever full-year contraction.
A Reuters poll conducted after the attacks showed economists expected, on average, a 1.59 percent decline in the economy this year
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Taiwan lifts 50-year ban on direct trade with China
By Alice Hung
TAIPEI (Reuters) - Taiwan lifted a 50-year ban on direct trade and investment in China on Wednesday as a goodwill gesture towards the mainland and in a bid to improve President Chen Shui-bian's standing ahead of December elections.
The government would scrap a US$50-million ceiling on individual investments in China and allow offshore units of Taiwan banks to remit money to and from China, the chairwoman of the cabinet's Mainland Affairs Council told a news conference.
Local businesses can directly invest in China instead of routing investments through a third country, Tsai Ing-wen said. |
