South Korea, Taiwan, Switzerland cut rates

Hurriyet Daily News with wires

South Korea's central bank yesterday carried out its biggest rate cut ever, slashing borrowing costs by a full percentage point to a record low. The Bank of Korea said it was slashing its benchmark seven-day repurchase rate to 3 percent from 4 percent, reported The Associated Press.

Taiwan's central bank also cut its key lending rate by a larger than expected 0.75 percent, the fifth rate cut in less than three months. In a statement on its Web site, the bank said it was cutting the rate from 3.125 percent to 2.375 percent because of "a continuing high risk for a downturn in economic growth."

The bank's statement said the impact of the cut would be to stimulate domestic demand. The rate cut comes in the wake of a significant fall off in Taiwanese exports, one of the main engines of the island's economic growth. On Monday the Finance Ministry said exports reached a three-year low of $16.8 billion in November, a decline of 23 percent from a year earlier.

Fourth cut in Switzerland
Also yesterday, the Swiss National Bank cut its key interest rate in half to 0.5 percent, its fourth reduction since October. The move came a week after European central banks cut their rates in an attempt to ward off a long recession triggered by the financial crisis.

Before cutting its interest rate to 2.5 percent in October, the Swiss bank had reduced its rates only once in the last 5 1/2 years. It cut its rates twice in November to 1 percent.

Only once in the past has the bank's key interest been lower - 0.375 percent between March 2003 and June 2004.

Canada's central bank cut its key interest rate Tuesday by three quarters of a percentage point to its lowest level in 50 years, saying the country is entering a recession because of the global economic crisis. It was the largest cut in the overnight rate since October 2001 in the aftermath of the Sept. 11 terrorist attacks and brought the key rate to its lowest level since 1958. The cut to 1.50 percent followed two cuts in October that lowered the rate by three quarters of a point.

Meanwhile, Brazil's central bank has left its key interest rate unchanged at 13.75 percent. The Central Bank said "the macroeconomic scenario continues surrounded by a lot of uncertainty."