© Reuters. FILE PHOTO: Staff member stands beside the Taiwanese Central Bank logo in Taipei
TAIPEI (Reuters) – There is room for more interest rate cuts in Taiwan, 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 interest rates 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 banks with T$200 billion ($6.61 billion) of financing to support companies hit hard by the virus’ impact.
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 outlook 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 financial markets 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 President Tsai Ing-wen has said a further T$40 billion was available.
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