Taipei - Taiwan's central bank Wednesday announced a benchmark interest rate cut of 50 basis points following a sharp decline of the island's total exports in December.

"Effective from Thursday, the benchmark interest rate would be lowered to 1.5 per cent from 2 per cent," the central bank said in a press release after an unscheduled board meeting.

It stressed the cut was to reflect the sharp decline in the island's total exports, which slumped by 42 per cent in December at 13.64 billion US dollars, due to the global economic recession.

The bank, which has been cutting its benchmark interest rates since late September, assured the public that it would not cut the rate to zero per cent. It also urged local banks not to tighten their lending to businesses in order to help them tide over difficulties. (dpa)