Mon, Mar 24, 2014 - Page 13 News List

Analysts expect central bank to leave rates unchanged

Staff writer, with CNA

The central bank is expected to leave its key interest rates unchanged in its next policymaking meeting scheduled for Thursday as consumer prices remain stable, market analysts said.

While the US Federal Reserve hinted last week that it is likely to raise interest rates in the first half of next year, six months after it ends its current stimulus program, the market has kept a close eye on whether Taiwan’s central bank will change its course to tighten liquidity.

In its last quarterly policymaking meeting held at the end of December last year, the bank left its interest rates intact, maintaining the discount rate at 1.875 percent, the rate of accommodations with collateral at 2.25 percent and the rate of accommodations without collateral at 4.125 percent.

It was the 10th consecutive quarter that the bank left its interest rates intact in order to boost the nation’s economy.

In the first two months of the year, the consumer price index rose 0.39 percent on an annual basis.

Analysts said the nation has felt little impact from any inflationary pressure so there is no urgency for the central bank to raise its interest rates any time soon, adding that the bank could continue to leave its monetary policy in place for another three months.

Although the Directorate General of Budget, Accounting and Statistics has forecast that the consumer price index for this year will rise 1.07 percent from last year, bank Governor Perng Fai-nan (彭淮南) said inflation could top the agency’s forecast due to a hike in pork prices caused by an outbreak of a pig virus that has killed many piglets.

Speaking at a meeting of the Legislative Yuan’s Finance Committee earlier this month, Perng said he still expected that growth in consumer prices will be slight even after higher pork prices are taken into account.

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