As real interest rates remain below the neutral level, the central bank yesterday announced it would raise the benchmark interest rate for the tenth straight quarter by 0.125 percentage points, effective today.
The latest rate increase will see the rediscount rate charged to commercial lenders at 2.75 percent.
The central bank also boosted the rate on accommodations with collateral and the rate on accommodations without collateral to 3.125 percent and 5.0 percent, respectively.
"Following the adjustment, real interest rates are getting closer and closer to the neutral level compared with the previous rate hike [in late September]," central bank governor Perng Fai-nan (
"They're not at the neutral level yet," he added.
Real interest rates are determined by the value of the prime rate minus the consumer price index (CPI).
Citing Directorate General of Budget, Accounting and Statistics (DGBAS) data, Perng said that CPI growth during the first 11 months of the year was only 0.59 percent on the previous year and that the core CPI -- excluding prices of vegetables, fruits, fishery products and energy -- during the period edged up by only 0.52 percent.
"Taiwan's price index growth this year was low and stable but next year, due to a low comparison base and raw material price hikes, CPI growth is expected to edge up to 1.52 percent based on DGBAS estimates," the governor said.
The central bank predicted the price index next year will climb by 1.75 percent and the core CPI to expand by 1.01 percent, still lower than the 2 percent benchmark the government sets for inflationary targeting.
The bank's report showed that excess reserves, reserve money, bank credit, and M2 money supply have all remained at reasonable levels.
In the first 11 months of this year, excess reserves averaged NT$5.7 billion (US$174.5 million), while the year-on-year growth rates of reserve money and bank credit were 5.37 percent and 6.30 percent, respectively. During the same period, the broad monetary aggregate M2 grew by 6.25 percent, staying within the bank's 3.5 percent to 7.5 percent target zone.
Perng said that the bank's fine-tuning approach to interest rates over the past quarters would only have a slight impact on the economy.
He said that for every NT$1 million loan, the monthly interest payment will only increase by NT$500.
Chou Ji (
Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), cast doubts on the bank's decision as inflation remains tame and next year economic expansion is expected to slow.
"Since global trade volume is expected to shrink next year, I wonder how exporters will be able to remain competitive," Liang said.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks