Mon, Feb 04, 2019 - Page 16 News List

Central bank dovish regarding its monetary policy

MORE TOOLS:Directors and supervisors at the bank expressed concern over fund outflows and huge foreign-exchange losses among Taiwanese life insurance firms

Staff writer, with CNA

The central bank was dovish toward its monetary policy with the economy facing uncertainty, the bank’s minutes from its quarterly policymaking meeting on Dec. 20 last year showed.

The minutes, released on Thursday last week, showed that some of its directors and supervisors agreed there was no urgency for the central bank to begin a rate hike cycle, as the pace of the local economy has shown signs of moderating due to uncertainty over global demand this year.

They also agreed that inflation remained tame, so preferred to keep the monetary policy unchanged, the minutes showed.

The central bank did not increase interest rates for the 10th consecutive quarter, keeping the rediscount rate at 1.375 percent, while it downgraded its GDP growth forecast for this year from 2.48 percent to 2.33 percent.

It also forecast that consumer prices would grow by 1.05 percent this year.

A move to maintain a stable monetary policy and stabilize the New Taiwan dollar is expected to help local enterprises map out effective investment decisions amid a slowing exports market, the minutes showed.

Due to weakening global demand, the central bank expects that domestic demand will serve as a major driver of domestic economic growth this year.

Some of the central bank’s directors and supervisors expressed concern over fund outflows and huge foreign-exchange losses among Taiwanese life insurers last year.

Listed companies issued record cash dividends last year, prompting foreign institutional investors to move funds out of Taiwan, while a strong US economy drew funds to that market, they said.

As for the life insurers, they said that if Taiwan had sufficient investment instruments, such firms would have more investment options to help mitigate foreign-exchange losses.

Last year, foreign institutional investors moved US$10.34 billion out of Taiwan, while combined foreign-exchange losses recorded by life insurers were estimated at more than NT$220 billion (US$7.16 billion).

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