■ TAIEX sheds 31.46 points
Share prices closed 0.48 percent lower yesterday after losses overnight on Wall Street sparked by fresh nervousness on the outlook for US interest rates, dealers said.
They said while investors expected the US Federal Reserve to hike rates again by 25 basis points to 5.25 percent at the end of a two-day meeting today, the real issue was what it may say about possible further increases.
Late bargain hunting trimmed some of the losses, helped by reports the government was planning to ease restrictions on China-bound investment.
The TAIEX fell 31.46 points to 6,540.93, on turnover of NT$77.78 billion (US$2.38 billion).
"Today's restrained decline pointed to a still largely cautious [stance] among investors," said Oliver Fang, a Yuanta Core Pacific Securities Corp (元大京華證券) assistant vice president.
■ Discount rate may rise
The nation's central bank will probably raise its benchmark interest rate for the eighth straight time today to an almost five-year high after inflation picked up.
The bank may increase the discount rate on 10-day loans to banks by one-eighth of a percentage point to 2.5 percent, according to 16 of 18 economists surveyed by Bloomberg News. Two forecast no change. A decision is expected after 5pm today, when the bank is scheduled to finish its quarterly policy meeting.
Governor Perng Fai-nan (彭淮南) of the central bank said on May 9 that interest rates were "still some distance away from what I'd call a neutral rate," signaling the bank may add to its seven increases since 2004, the longest stretch since at least 1991.
■ No more rises, says Taipower
Taiwan Power Co (Taipower, 台電) said power prices were unlikely to rise again soon after the first increase in 23 years, because of government efforts to counter inflation.
The state-run utility will increase tariffs by an average of 5.8 percent on July 1 after the Ministry of Economic Affairs approved the plan, Lee Chuan-lai (李傳來), a company spokesman, said yesterday.
The government is allowing the company to raise tariffs for the first time since 1983 after the utility's net income plunged 73 percent last year because of increased fuel costs. The gains would add 0.116 percentage points to growth in the consumer price index, the company said.
The government turned down Taipower's request to have the leeway in future of cutting or raising prices by as much as 3 percent to allow for changes in costs, Lee said.
■ Independent directors possible
The Ministry of Finance said yesterday that the government was considering installing two independent directors on the board of the Land Bank of Taiwan (土地銀行), according to a Central News Agency report.
The bank is expected to reshuffle its board tomorrow.
This would be the first time the government had installed independent directors on the board of a state-controlled bank, the report said, citing the ministry's Government Shareholding Management Unit.
The report added that the government was also expected to secure three out of four seats on the board of Taiwan Cooper-ative Bank (合作金庫銀行) at a by-election to be held on the same day.
Tomorrow's shareholders' meeting will be Taiwan Cooperative's first since it acquired the Farmers Bank of China (農民銀行).
■ NT holding ground
The New Taiwan dollar held its ground against its US counterpart yesterday, rising NT$0.009 to close at NT$32.655 on the Taipei foreign exchange market.
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