Taiwan’s central bank will most likely keep its key interest rates low next year as the country continues to grapple with low economic growth and inflation, analysts said yesterday.
Tony Phoo (符銘財), a Taipei-based economist at Standard Chartered Bank, upheld the bank’s “cautious stance” that the central bank will likely hold interest rates unchanged through the first half of next year.
The prediction follows the central bank’s announcement on Thursday that key interest rates would remain unchanged for the 10th consecutive quarter, maintaining the 1.875 percent discount rate, 2.25 percent rate for accommodations with collateral and the 4.125 percent rate for accommodations without collateral.
The central bank said its ability to raise interest rates is limited since the economic and manufacturing industries continue to lag behind expectations.
Raymond Yeung (楊宇霆), a senior economist with Australia and New Zealand Banking Group Ltd, held a similar view that the central bank will continue to maintain a “wait-and-see attitude” as the low inflationary regime will extend into next year.
“The central bank will likely link its interest rate policy to the forthcoming movement of the US dollar floating rate, which is expected to stay low for most of 2014,” Yeung wrote in a research note in which he predicted unchanged base rates through December of next year.