Taipei - Taiwan announced an interest-rate cut Sunday to slow down the recession and to stimulate the island's economy.

The central bank of Taiwan said that starting Monday it would cut interest rates by 0.25 percentage points.

The rediscount rate would be cut from 3 to 2.75 per cent, the rate on accommodation with collateral from 3.375 to 3.125 per cent and the rate on accommodation without collateral from 5.25 to 5 per cent.

Central bank governor Peng Fai-nan said that the interest rate cut would ease inflation caused by fallen oil and commodity prices, the 8.3-per-cent drop in Taiwan's October exports and the International Monetary Fund's forecast that all major industrial nations except China would face an economic downturn in 2009.

"I hope Taiwan's economy will not deteriorate, but all the data and forecasts say that it will slow down," he told a news conference.

Taiwan has cut interest rates four times in the past month, but in small amounts, totalling 0.875 per cent. (dpa)