Taiwan Cuts Key Rate in Fed Defiance as Export Slump Deepens

Bloomberg News
Date: December 17, 2015
By: Justina Lee
      Cindy Wang

Taiwan cut its policy rate for a second straight quarter, marking a divergence from the U.S., as a contraction in exports shows no signs of a recovery.

The central bank lowered the benchmark discount rate by another 12.5 basis points to 1.625 percent, it said in a statement in Taipei on Thursday. Twelve of 25 economists surveyed by Bloomberg had predicted a cut, while the remainder had expected the rate to be held after it was reduced for the first time since 2009 in September.

Policy makers cited an expanding negative output gap and mild inflation expectations in their statement. External demand is unlikely to improve next year, and slower economic growth has affected inflation, the central bank said in the statement, adding that the global economic outlook faces downside risks.

Exports dropped the most since 2009 last month, signaling the dim prospects of a recovery from a 10-month slump, as economic growth in the biggest market China slows. With domestic consumption also cooling, the economy shrank for the first time in six years last quarter.     [FULL  STORY]

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