03.21.2001
The Fed reduces benchmark rate by 50 bps - CBC to follow suit

• In line with forecasts across the board, the US Federal Reserve lowered its benchmark interest rate by 50 basis points to 5% at its March 20 policy meeting.

• The move will give Taiwan's Central Bank (CBC) more room to reduce its own rediscount rate before the end of March.

• Faced with a slowing domestic economy and soft global demand, the CBC has already lowered its rediscount rate three times since December 2000, bringing the rate down to 4.25% in March from 4.75% in November 2000.

• We expect the CBC to cut its rediscount rate by another 50 basis points in 1H01 in order to boost domestic demand. We predict a 25 basis points domestic rate cut before the end of March.

IrmakSurenkok@Primasia.com +886-[0]2-2547-8873