The central bank yesterday kept its rediscount rate unchanged at 1.375 percent for the 14th consecutive quarter, saying there is still room for the nation’s economy to improve, as inflation remains benign.
The move was in line with the stance of major central banks, which have embarked on monetary easing to cushion the impact of the US-China trade dispute, geopolitical frictions and other downside risks.
“The negative output gap, which now stands at 0.34 percent, could widen to 0.42 percent next year,” bank Governor Yang Chin-long (楊金龍) told a news conference in Taipei after a board meeting.
Photo: CNA
The output gap — the difference between actual GDP and potential GDP — has topped the list of the bank’s concerns when it sets policy rates on a quarterly basis.
An accommodative monetary stance is warranted as the global economy remains fragile, Yang said.
The economic slowdown in China — which absorbs about 40 percent of Taiwanese exports — could worsen next year, despite a tentative trade agreement with the US, Yang said.
Taiwan should continue to benefit from trade rerouting and order transfers, with the nation’s GDP forecast to rise 2.6 percent this year and 2.57 percent next year, the governor said.
Both readings represent a modest upgrade from the bank’s projection three months earlier, but are less upbeat compared with the Directorate-General of Budget, Accounting, and Statistics’ forecasts of 2.64 percent growth this year and 2.72 percent next year.
“We are less optimistic about the size of private investment,” Yang said.
The governor confirmed that the bank had repeatedly intervened in the foreign-exchange market, often at the end of the trading session, to stem the pace of appreciation of the local currency.
It is the bank’s duty to maintain stability and order in the financial market, and intervention is sometimes necessary to achieve that goal, he said.
An influx of hot money has pushed the New Taiwan dollar up 3.83 percent against the US dollar since August, the bank’s data showed.
Yang added that property transactions have regained momentum, especially for residential housing in central and southern Taiwan, as well as for land and office prices nationwide.
Several board members shared the observation and local banks are generally positive about a continued recovery, Yang said.
However, the market has not evolved to such an extent that credit control measures are merited, he said.
The bank expects consumer prices to grow a mild 0.54 percent this year and climb to 0.77 percent next year, allowing room for monetary easing.
Taiwan’s foreign exchange reserves hit a record high at the end of last month, surpassing the US$600 billion mark for the first time, the central bank said yesterday. Last month, the country’s foreign exchange reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion due to an increase in returns from the central bank’s portfolio management, the movement of other foreign currencies in the portfolio against the US dollar and the bank’s efforts to smooth the volatility of the New Taiwan dollar. Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民)said a rate cut cycle launched by the US Federal Reserve
Handset camera lens maker Largan Precision Co (大立光) on Sunday reported a 6.71 percent year-on-year decline in revenue for the third quarter, despite revenue last month hitting the highest level in 11 months. Third-quarter revenue was NT$17.68 billion (US$581.2 million), compared with NT$18.95 billion a year earlier, the company said in a statement. The figure was in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$17.9 billion, but missed the market consensus estimate of NT$18.97 billion. The third-quarter revenue was a 51.44 percent increase from NT$11.67 billion in the second quarter, as the quarter is usually the peak
The US government on Wednesday sanctioned more than two dozen companies in China, Turkey and the United Arab Emirates, including offshoots of a US chip firm, accusing the businesses of providing illicit support to Iran’s military or proxies. The US Department of Commerce included two subsidiaries of US-based chip distributor Arrow Electronics Inc (艾睿電子) on its so-called entity list published on the federal register for facilitating purchases by Iran’s proxies of US tech. Arrow spokesman John Hourigan said that the subsidiaries have been operating in full compliance with US export control regulations and his company is discussing with the US Bureau of
Pegatron Corp (和碩), a key assembler of Apple Inc’s iPhones, on Thursday reported a 12.3 percent year-on-year decline in revenue for last quarter to NT$257.86 billion (US$8.44 billion), but it expects revenue to improve in the second half on traditional holiday demand. The fourth quarter is usually the peak season for its communications products, a company official said on condition of anonymity. As Apple released its new iPhone 17 series early last month, sales in the communications segment rose sequentially last month, the official said. Shipments to Apple have been stable and in line with earlier expectations, they said. Pegatron shipped 2.4 million notebook
RSS