Fri, Jun 22, 2018 - Page 12 News List

Central bank keeps policy, warns of changes ahead

By Crystal Hsu  /  Staff reporter

Central bank Governor Yang Chin-long speaks at a news conference in Taipei yesterday following a meeting of the bank’s board of directors.

Photo: Huang Yao-cheng, Taipei Times

The central bank yesterday kept the rediscount rate unchanged at 1.375 percent for the eighth consecutive quarter, with a reminder that home owners should make sure that their funds are adequate if interest rates go up in the future.

The bank extended its lenient monetary policy, even though it raised its forecast GDP growth this year from 2.58 percent to 2.68 percent on the back of stronger exports.

Despite the upward revision, “economic growth remains slow and global uncertainty lingers,” Governor Yang Chin-long (楊金龍) told a news conference after the bank’s quarterly board meeting.

Trade tensions between the US and China have escalated and global market volatility has increased since the US Federal Reserve last week raised its interest rate by another 25 basis points, with hints that more adjustments would take place this year.

Global funds have pulled out of emerging markets, including Taiwan, and weakened their currencies, Yang said, adding that the New Taiwan dollar has declined faster than expected.

The NT dollar shed 1.07 percent against the US dollar this month, giving rise to concerns that such a slide might cause imported inflation, while the unabated increase in crude oil prices also increases cost burdens, market watchers said.

Yang said such worries are unjustified as the NT dollar has still gained more than 3 percent against the US dollar this year.

“The bank will closely monitor global fund movements, tariff rows as well as luxury housing in Taiwan,” Yang said.

Small and large homeowners should check whether they would be able to afford the additional mortgage burdens if interest rates were to go up, he said, adding that the monetary cycle would not stay still forever.

Yang also called on the public to evaluate the risks associated with cryptocurrencies.

They are not physical currencies, but virtual tokens prone to human manipulation and fraud, he said, adding that central banks worldwide share that view.

The central bank for the first time commented on Internet-only banks, which the Financial Supervisory Commission in April said it would issue two licenses for next year.

The commission is drawing up new regulation so that interested parties could file applications from November, it said.

Taiwan is technologically ready to develop Web-only banks, with 82.3 percent of households having access to the Internet and 15 million people owning smartphones, Yang said.

Potential joint ventures between telecoms and conventional banks would be good for business as the former already have large customer bases, he said.

However, overbanking could limit profitability and Internet-only operations would make it more difficult to cultivate customer loyalty or maintain trading safety, he said.

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