TAIPEI (Reuters) -- Taiwan's central bank cut its policy rate for the second time this year on Thursday to shore up growth in the island's trade-dependent economy as the outlook for global demand continued to weaken.
The move was unexpected with all but four of 17 economists polled by Reuters had expected no change to the benchmark discount rate, which is now set at 1.625 percent from 1.75 percent.
"Global economic performance has been worse than expected recently," the central bank said in its statement. It said that "cutting the policy rate...will help promote economic growth."
The central bank cited the slowing recovery seen in the eurozone, Japan, China and emerging economies as causes for concern, despite stable growth in the U.S. economy.
Taiwan's export-oriented economy, driven by demand for its signature technology goods, many of which are packed into the popular Apple Inc iPhones, is set this year to turn in its weakest annual growth since the global financial crisis.
"The rate cut was unexpected," said Andrew Tsai, analyst with KGI Securities Investment Advisory. "The recent drop in oil prices is worrying, so risks to the downside remain."
Tsai said he expects another rate cut in the first half of next year.
While there is some optimism about an economic recovery in the U.S., growth in China, another key trading partner for Taiwan, is decelerating.
The central bank last cut the largely symbolic policy rate by 12.5 basis points in late September, its first rate change since mid-2011. The policy decision was followed by economic data that showed Taiwan had fallen into recession in the third quarter.
The government is forecasting the economy to rise by a mere 0.49 percent year-on-year in the final quarter of 2015, but weak exports data in November has raised doubts that growth can be sustained.
