'We can't solely depend on the monetary policy,' Mr Perng told lawmakers when asked if Taiwan would cut its rates to zero.

'We need fiscal measures as well,' he added, without elaborating.

The bank earlier this month announced its largest rate reduction in 26 years, leading the market to believe it would join the world's other central banks in a series of further cuts amid the global economic meltdown.

Since mid-December the central bank has cut the discount rate to 2.00 per cent from 2.75 per cent, the unsecured loans rate to 4.25 percent from 5.00 per cent and the secured loans rate to 2.375 per cent from 3.125 per cent.

The 75 basis point cut was deeper than the market had expected and analysts said the move showed the local economy was in a worse state than expected.

Taiwan's gross domestic product (GDP) fell 1.02 per cent in the third quarter, marking the first such decline in seven years due to falling spending and investment.

GDP is projected to fall 1.73 per cent in the fourth quarter while the full-year 2008 is expected to grow by 1.87 per cent. -- AFP