05.15.2001
Taiwan likely to shadow US Fed on interest rate cut

• In an attempt to boost domestic demand, Taiwan's Central Bank has cut interest rates five times since December 2000, bringing the rediscount rate down to the current 4.0% from 4.75% at the end of last year.

• Since the beginning of this year, the US Federal Reserve has also lowered its fund rate to 4.5% from 6.0%, thus narrowing the interest rate differential between Taiwan and the US. We think the Fed is likely to cut its benchmark rate once again at its open market committee meeting today, probably by 50 basis points to 4.0%.

• VB Primasia Opinion: We expect the Central Bank here to follow suit, and predict that it will cut its rediscount rate by 12.5 basis points in May. Furthermore, we expect the rediscount rate to come down to 3.75% by the end of 1H01.

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