The central bank is likely to leave its key interest rates unchanged during its next quarterly policymaking meeting scheduled next month in order to keep liquidity ample, Australia and New Zealand Banking Group Ltd (ANZ) said.
In a research note released on Friday, ANZ said the central bank aims to use a high-liquidity environment to pave the way for economic recovery in Taiwan, after the nation’s economy hit a low in the third quarter.
During the last policymaking meeting held in September, the central bank maintained the discount rate at 1.875 percent, the rate of accommodations with collateral at 2.25 percent and the rate of accommodations without collateral at 4.125 percent.
It was the fifth consecutive quarter in which the central bank held on to interest rates after it stopped a rate-hike cycle in the third quarter of last year in an effort to stimulate the economy.
Late last month, the government cut its forecast for GDP growth for this year to 1.05 percent from an earlier estimate of 1.66 percent due to global economic uncertainty and weak domestic consumption.
It was the ninth downward revision this year amid weakness in the world’s economic fundamentals, which has affected global demand.
In the first 10 months of this year, the nation’s consumer price index (CPI) rose 2 percent from a year earlier.
ANZ has anticipated that the CPI will rise 1.87 percent in the fourth quarter, even slightly lower than the current discount rate of 1.875 percent.
However, ANZ said that as major central banks in the world have been pumping funds into the domestic markets to boost growth, Taiwan’s central bank will pay close attention to the spill-over effects from overseas economies.