The central bank yesterday kept its benchmark interest rates unchanged for the sixth straight quarter, as the market expected, citing a mild pickup in the domestic economy and slowing pressure in consumer prices.
The bank’s discount rate will remain at 1.875 percent, with the collateralized loan rate and the unsecured loan rates at 2.25 percent and 4.125 percent respectively.
“We maintained a moderate loose monetary policy,” central bank Governor Perng Fai-nan (彭淮南) told a press conference.
Major global countries have continued their quantitative easing measures for this year, leading economic sentiment to rebound moderately, the bank said in a statement.
The mild pickup in economic sentiment may lead demand on global crude oils and other raw materials to keep flat, further slowing inflationary pressure globally, the bank said.
Earlier this month, Perng had said that domestic price levels should have been lower on the back of the yen’s weakening.
However, the yen’s depreciating trend may not have that much of an effect on Taiwan’s economy compared with South Korea’s — which yesterday lowered its economic growth forecast from 3 percent to 2.3 percent, Perng said.
Raymond Yeung (楊宇霆), a Hong Kong-based economist at ANZ Research, said he expects the central bank to start raising policy rates in the fourth quarter at the earliest, with Taiwan’s inflationary pressure and growth momentum in the economy to pick up in the second half of this year.
Before the bank’s board meeting, some market analysts had predicted the bank would announce credit-tightening measures on housing loans for properties in certain areas in Taoyuan County (桃園).
The measure is currently in place in Taipei and certain areas in New Taipei City (新北市).
However, the bank did not substantially expand the program.
Perng said the central bank did ask domestic financial institutions to enhance credit control for housing loans in certain areas outside the current controlled areas — which have seen property prices increase more significantly — but he refused to specify which areas.
In related news, Bank of Taiwan’s (台灣銀行) Shanghai branch — the New Taiwan dollar’s clearing bank against the yuan in China — is set to start accepting NT dollar exchanges on Tuesday.
The bank will be allowed to exchange a maximum of NT$60,000 per person per exchange. The Chinese government restricts the total annual foreign currency exchange for Chinese nationals to a maximum of US$50,000.
Thirteen Chinese banks and the Chinese branches of nine Taiwanese banks are expected to sign an agreement with Bank of Taiwan soon to be an NT dollar participating bank, the central bank said.