Weak yen unlikely to affect interest rates

Staff writer, with CNA

Thu, May 16, 2013 - Page 13

The central bank is unlikely to adjust interest rates in the short term even in the face of a weakening Japanese yen, the Australia and New Zealand Banking Group Ltd (ANZ) said yesterday in its latest weekly research note.

“We believe the central bank will continue to ensure the ‘orderly functioning’ of the foreign exchange market and will emphasize stability in response to global currency volatility,” the bank said.

The central bank’s next quarterly policymaking meeting is scheduled for next month. It maintained its benchmark discount rate at 1.875 percent at its last meeting in March for the seventh consecutive quarter.

Rates were last adjusted in June 2011, when the central bank increased the benchmark discount rate by 12.5 basis points to 1.875 percent.

With Taiwan’s economic recovery sluggish and inflationary pressure limited, the central bank is expected to keep interest rates unchanged for most of the year, with the first policy rate hike forecast to take place in the fourth quarter at the earliest, ANZ said.

ANZ said it expects Taiwan’s growth momentum to pick up a little in the second quarter and accelerate through the rest of the year, in conjunction with predicted pick-ups in China and the US.

It reiterated its 3.6 percent GDP growth forecast for Taiwan this year, with China’s estimated to reach 7.8 percent and Hong Kong’s 2.5 percent.