The central bank yesterday kept policy rates unchanged for the 10th consecutive quarter, saying that a global economic slowdown and the US-China trade dispute merited a lenient policy.
The monetary policymaker trimmed its GDP growth forecast for this year to 2.68 percent from the 2.7 percent it predicted in September, and is anticipating a 2.33 percent pickup next year.
“The domestic stock rout has taken a toll on consumer spending, while economic weakness in major trading partners might dampen external demand,” central bank Governor Yang Chin-long (楊金龍) told a news conference after the bank’s quarterly board meeting.
Photo: CNA
Against this backdrop, the board unanimously agreed to hold the rediscount rate steady at 1.375 percent, the collateralized loan rate at 1.75 percent and the unsecured loan rate at 3.625 percent.
The downward GDP growth revision came after international research institutes cut forecasts for major economies and turned cautious, Yang said.
Taiwan, home to some of the world’s biggest electronic component suppliers, is susceptible to cyclical global technology corrections and effects of hostile tariff exchanges between Washington and Beijing, as such components account for more than half of all exports.
A conservative outlook led the bank to keep its target range for broad money supply next year unchanged at 2.5 percent to 6.5 percent, Yang said.
The bank expects consumer prices to increase 1.05 percent next year, while the consumer price index, a reliable long-term price tracker, would advance at a milder 0.93 percent, Yang said.
International oil prices have stabilized, easing imported inflationary pressures, the governor said, adding that stable consumer prices gave the bank room to adopt an accommodative monetary policy.
Yang declined to comment on policy rate changes next year, saying that the bank would base its decisions on the latest economic figures.
“Moves by other central banks will serve as a reference, but will not be the decisive factor,” he said.
Yang, who has a doctorate in economics, declined to comment on movements of the US dollar or capital flows, saying that most predictions have proved to be inaccurate.
He dismissed criticism that the bank failed to do anything to curb capital flight to pursue higher returns in US dollar-denominated assets following a series of rate hikes by the US Federal Reserve.
The capital outflows wreaked havoc on the local bourse, but also led to higher dividend payouts this year, Yang said.
Dividend payouts this year totaled NT$1.4 trillion (US$45.3 billion), up 11.8 percent from last year, with NT$460 billion wired overseas to foreign investors, the bank said.
France cannot afford to ignore the third credit-rating reduction in less than a year, French Minister of Finance Roland Lescure said. “Three agencies have downgraded us and we can’t ignore this cloud,” he told Franceinfo on Saturday, speaking just hours after S&P lowered his country’s credit rating to “A+” from “AA-” in an unscheduled move. “Fundamentally, it’s an additional cloud to a weather forecast that was already pretty gray. It’s a call for lucidity and responsibility,” he said, adding that this is “a call to be serious.” The credit assessor’s move means France has lost its double-A rating at two of the
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
RSS