Asian central banks cut rates

FT ^ | 10/09/08 | Kathrin Hille in Taipei, Tom Mitchell in Hong Kong and Song Jung-a in Seoul

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Asian central banks cut rates

By Kathrin Hille in Taipei, Tom Mitchell in Hong Kong and Song Jung-a in Seoul

Published: October 9 2008 02:27 | Last updated: October 9 2008 04:16

Central banks in Taiwan, South Korea and Hong Kong cut interest rates on Thursday in steps that closely follow America’s and Europe’s policy response to the financial crisis.

In an extraordinary policy meeting Thursday morning just two weeks after its last rate cut, which had reversed course following a four-year rate raising cycle, Taiwan’s Central Bank of China lowered the benchmark discount rate to 3.25 per cent from 3.5 per cent.

The decision came less than a day after central banks in the US, Canada, the EU, the UK and Switzerland lowered rates by half a percentage point.

The Bank of Korea unexpectedly cut interest rate for the first time in four years to shore up the troubled economy. Growth in Asia’s fourth-largst economy is expected to slow further amid the deepening global credit crunch.

The central bank cut its benchmark interest rate to 5.0 per cent from a seven-year high of 5.25 per cent as it placed priority on protecting the economy from the fallout of the global financial crisis.

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