The central bank yesterday kept its benchmark interest rates unchanged for the fifth straight quarter as expected in an effort to keep the nation’s inflation in check as the US’ new round of quantitative easing measures would increase risks in the near term.
The bank’s discount rate is to remain at 1.875 percent, with the collateralized loan rate and the unsecured loan rates held at 2.25 percent and 4.125 percent respectively.
“Monetary policy needs to keep an eye on the nation’s inflation outlook over the near future,” central bank Governor Perng Fai-nan (彭淮南) told a media briefing after the bank’s quarterly board meeting.
Despite annual inflation expanding at its fastest pace in four years at 3.42 percent last month, most of the growth can be attributed to increased vegetable and fruit prices in the wake of several typhoons, a short-term factor, Perng said.
However, Perng said that the US Federal Reserve’s third round of quantitative easing (QE3) would put some tension on consumer prices in Taiwan in the near future, even though the new bond-buying measures would be weaker than the first and second rounds of quantitative easing.
Combining the risks of expected rising inflationary pressure with continuous global economic uncertainties, the central bank decided to leave the key interest rates unchanged, it said in a statement.
Meanwhile, the bank intends to continue to adopt a “moderate easing monetary policy” by using open market operations to adjust liquidity, Perng said.
The nation’s economy could grow more than 1 percent this year, with the expansion of headline inflation slightly lower than 2 percent, Perng said, citing the latest data published by the bank’s economic research department.
The central bank did not impose more credit-tightening measures on housing loans at the board meeting yesterday, going against recent speculation about more credit control measures to combat speculative house buying.
The bank has implemented stricter credit-tightening measures on luxury housing loans in June to curb property speculation in the greater Taipei area and maintain financial stability.
The concentration of real-estate loans has been improving since the bank first launched selective credit-tightening measures on June 2010, Perng said.
The outstanding balance of real-estate loaning accounted for 36.12 percent of overall balance of loaning in July, down from the 37.72 percent recorded in June 2010, central bank statistics showed.
The new housing loans adopted in the greater Taipei area accounted for 51.64 percent of all the new housing loans, down 12.73 percentage points from the 64.37 percent posted in June 2010, evidence the improvement on loan concentration, data showed.
On the currency front, although the nation’s momentum in exports continued to be weak, Perng said the central bank plans to maintain its “dynamically stable” strategy regarding the exchange rate of the New Taiwan dollar.