The central bank yesterday kept its rediscount rate unchanged at 1.375 percent for the 11th consecutive quarter, on concerns about an economic slowdown at home and abroad as the US-China trade dispute lingers.
“Growing uncertainty and persistent negative output gaps warrant an extended accommodative monetary policy to help support economic growth,” central bank Governor Yang Chin-long (楊金龍) told a news conference in Taipei after the bank’s quarterly board meeting.
The central bank trimmed its GDP growth forecast for this year from 2.33 percent to 2.13 percent, as the global economy might fare weaker than expected, which would in turn slow demand for Taiwanese exports.
Photo: Peter Lo, Taipei Times
As inflation is also easing, because international crude oil and raw material prices have lost steam due to weakening demand, the bank also slashed its growth estimate for the consumer price index (CPI) and core CPI to 0.91 percent and 0.78 percent respectively this year, lower than the increases of 1.05 percent and 0.93 percent it predicted in December last year.
However, the bank dismissed worries that the nation’s GDP would enter contraction this quarter, following four straight months of negative showing in exports.
The Directorate-General of Budget, Accounting, and Statistics last month projected a 1.82 percent GDP growth for the first quarter, despite a 2.81 percent contraction in exports during the same period, while foreign banking groups have said net external demand could receive a boost from a steeper downturn in imports.
Recent rallies on the nation’s bourses and capital repatriation from Taiwanese firms relocating from China might help bolster domestic demand, Yang said.
The government has lent a helping hand through domestic travel subsidy offers and purchases of energy-saving home appliances, he said, adding: “The economy might show improvement each quarter” this year.
The chance of monetary tightening appears unlikely going forward after US Federal Reserve indicated plans to quit offloading its assets in September, and the chances of rate cuts in the US are now bigger than rate hikes according market projections, he said.
Despite the dovish rhetoric, Yang said he would still keep credit control on luxury housing for fear that some capital repatriation might flow to the property market and threaten the financial sector’s stability.
Yang said he was comfortable with the fact that housing transactions increased modestly while prices held relatively steady.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
O2O BICYCLE SHOW: The Taiwan Bicycle Show next year is to be online to offline, with forums, audio-visual conferences and livestreaming of the offline events Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing Co Ltd (巨大機械) chairwoman Bonnie Tu (杜綉珍) told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. The pandemic has reduced bicycle supplies and increased demand around the world, Robert Wu (吳盈進), chairman of KMC (Kuei Meng) International Inc (桂盟國際), one of the world’s