Taiwan cut its policy rate by 12.5 basis points on Thursday as part of measures to stimulate growth after the island's economic authority announced it would be difficult to maintain the GDP growth rate above one percent this year.
It was the first rate cut in 17 quarters as Taiwan's latest economic data remained sluggish and its export-oriented economy is experiencing the sharpest contraction since the end of the 2008-2009 global financial crisis.
Taiwan's banking supervisory body said the widening output gap, meaning the actual GDP is still below its potential even when the island is fully employed, is the main reason for the rate cut.
According to the island's statistics bureau, export orders registered the fifth consecutive monthly decline year-on-year and industrial production the fourth consecutive monthly drop year-on-year.
The bureau also reported the sixth consecutive month of drops in domestic commercial sales in August.
Following the rate cut, Taiwan's rediscount rate has dropped to 1.75 percent, rate on accommodations with collateral to 2.125 percent and rate on accommodations without collateral to four percent.
