Taiwan central bank says still room for further interest rate cuts

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© Reuters. FILE PHOTO: Staff member stands beside the Taiwanese logo in Taipei

TAIPEI (Reuters) – There is room for more interest rate cuts in , but they will not be reduced to zero or into negative territory, and the government will offer more funds for small- and medium-sized companies if needed, its central bank said on Monday.

The central bank this month cut for the first time in more than four years to a new low of 1.125%, and reduced its growth forecast for the export-oriented economy amid growing fears that the coronavirus could trigger a global recession.

It also said it would provide with T$200 billion ($6.61 billion) of financing to support companies hit hard by the virus’ impact.

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Speaking at parliament, central bank governor Yang Chin-long said more money would be made available if the T$200 billion is insufficient.

If the virus continues into the third and fourth quarters of this year, there will only be a small chance the economy will maintain growth of 2%, he added.

The bank has already cut its full-year economic growth to 1.92% from 2.57% forecast in December due to the virus.

Some banks have cut their GDP forecasts for Taiwan to far below the central bank’s expectation. ING has downgraded its forecast to -0.4% from 0.8% for 2020.

However, Yang said that so far the impact of the virus on the was not as severe as in 2008, and there would not be a financial crisis.

The island is rolling out a T$60 billion stimulus package to help soften the economic impact of the virus and Tsai Ing-wen has said a further T$40 billion was available.

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Source: Investing.com

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