Taiwan’s central bank cuts discount rate by another 12.5 bps to 1 3/8%

By Wendy Van Sickle

Columbus, Ohio, June 30 – The Central Bank of the Republic of China (Taiwan)’s board decided to decrease the bank’s policy rates by 12.5 basis points at its meeting on Thursday, according to a news release.

The discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral were lowered to 1 3/8%, 1¾% and 3 5/8%, respectively.

As previously reported, the board lowered the rates to 1½%, 1 7/8% and 3¾% in March, to 1 5/8%, 2% and 3 7/8% in December and to 1¾%, 2 1/8% and 4%, respectively, in September.

The board said that since the beginning of the year, growth projections for the world economy for 2016 have been revised down. Additionally, the United Kingdom’s vote in a referendum last week to leave the European Union heightened volatility across global financial markets. Uncertainty after the referendum, the board noted, will likely affect monetary policies of major economies, international raw material prices and outlook for the global economy.

Domestically, exports were hit by sluggish global growth and private investment has also been subdued, contributing to less-than-expected economic growth. The domestic economy is expected to grow faster in the second half of the year than the previous half and to expand by 1.06% for the year as a whole, according to the Directorate-General of Budget, Accounting, and Statistics’ May forecast.

The board said to maintain financial stability while taking into consideration a widening negative output gap and downside risks from slack in the global economy and fallout from the UK referendum, it judged that reducing policy rates is conducive to economic growth.

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