After the central bank wrapped up its final policy-making meeting of the year yesterday, it decided to keep the rediscount rate at a record low 1.625 percent in an effort to stimulate the economy.
The rediscount rate is the rate charged to commercial banks for 10-day loans. The central bank also maintained its secured loan rate at 2 percent and its unsecured loan rate at 3.875 percent.
At a press conference held immediately after the meeting, central bank Governor Perng Fai-nan (彭懷南) said he expects the nation's economy to grow 3.43 percent and consumer prices to rise 0.35 percent next year.
Asked why the central bank's economic forecast next year is better than the 3.38 percent predicted by the Directorate General of Budget, Accounting and Statistics, Shih Yen (施燕), director general of the central bank's economic research department, said the bank expects Taiwan's exports to continue to expand and domestic demand to improve.
He said the likelihood of US military action against Iraq and a potential spike in oil prices could lower the GDP by 0.2 percent.
Taiwan, which is recovering from its worst economic slump in decades, is counting on rising exports to China and the US to reach 3.38 percent economic growth this year.
Low interest rates are helping to keep the New Taiwan dollar from rising, making exports more competitive.
The local currency has fallen 3.6 percent against its US counterpart in the last six months, making it the worst-performer in the region.
Perng said he the unit has been relatively stable against the greenback, adding that the central bank will intervene if currency fluctuations become too erratic.
"The exchange rate of the NT dollar should reflect the nation's economic fundamentals," Perng said.
The central bank has lowered its benchmark interest rate 14 times since December of last year. Banks, nevertheless, have been reluctant to lend in an effort to lower bad-loan ratios. Loans by banks fell in November compared to the same month last year, the central bank said.
"The interest-rate policy is not very effective now because of the credit crunch," said Franklin Poon, an economist at ABN Amro Asia Ltd. "In terms of the economic outlook, it all depends on external factors."
The central bank also predicts that the money supply will increase 3 percent and 7 percent next year as more capital is channeled into bonds instead of stocks.
This is the first time that the central bank has included bond funds in the money-supply forecast.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San