The central bank yesterday reiterated that it will gradually steer monetary policy back to a neutral level as inflationary pressure remains a factor and real interest rates are low.
CPI slowing
The Directorate General of Budget, Accounting and Statistics forecast that the consumer price index growth this year would drop to 1.71 percent from 2.30 percent last year. But as it is difficult to predict fluctuations of international crude oil prices, domestic consumer prices are still under pressure to climb, said central bank governor Perng Fai-nan (
The bank has raised its benchmark interest rates for six consecutive quarterly meetings since October 2004 by a total of 0.875 percentage points, bringing its rediscount rate charged to commercial lenders to 2.25 percent.
Chinese Nationalist Party (KMT) Legislator Yang Chiung-ying (
In response, Perng said these claims were based on market speculation and that the nation's monetary policy would only be confirmed following discussions in the board of directors' meeting, slated for the end of this month.
Last week, the Bank of Japan announced that it would tighten the liberal monetary policy it has employed for five years, saying it would gradually raise interest rates and remove the excess cash from the banking system amid signs of economic recovery.
Although Japan has brought its ultra-loose monetary policy to an end, this would only benefit Taiwan's foreign exchange reserves after Japan increases its interest rates, Perng said, in response to a question raised by KMT Legislator Lo Ming-tsai (羅明才).
No comment
The governor refused to disclose whether the central bank would adjust its foreign exchange reserve portfolio to avoid intervention in the market.
However, he said he would like to see Japan's economy take off as the world's prosperity cannot be solely boosted by the US and China.
"If Japanese and European economies can also recover, then we'll have four engines to drive international growth," he said.
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