Taiwan Cuts Key Rate for Fourth Meeting Amid Brexit Overhang

  • Expansionary fiscal policy needed to help boost growth
  • Governor Perng says Fed rate increase unlikely this year

Taiwan’s central bank lowered its benchmark interest rate in a widely expected decision as the export-dependent economy’s growth prospects remain under pressure.

At its quarterly board meeting Thursday, the Central Bank of the Republic of China (Taiwan) cut the benchmark rate to 1.375 percent from 1.5 percent. Twenty four of 27 economists had seen a cut of at least 12.5 basis points this quarter.

Taiwan is battling three consecutive quarters of economic contraction and global demand for its goods has fallen every month since February 2015. Central banks around the world have offered fresh funds to financial systems and intervened in currency markets to offset panic generated by the U.K.’s vote to exit the European Union.

Taiwan’s CBC reiterated that trade could be affected in the long run if the EU economy is hurt by Brexit, but that the island would see limited fallout from the events.

Taiwan’s current monetary policy is very loose, and expansionary fiscal policy is needed to help boost growth, the central bank said. The U.S. Federal Reserve is unlikely to raise interest rates this year, Taiwan’s central bank Governor Perng Fai-Nan said at a briefing.

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