Bank to keep rates steady: analysts

Staff writer, with CNA

Mon, Dec 23, 2013 - Page 13

The central bank is expected to maintain its current base interest rate of 1.875 percent when it holds its quarterly board meeting on Thursday, analysts said.

It is likely to be the 10th time that the bank maintains its discount rate at the same level since the quarterly meeting of its board of directors in September 2011.

Tony Phoo (符銘財), chief economist at Standard Chartered Bank, forecast that interest rates will go up, but that the central bank would not adjust its discount rate just yet.

He forecast that the bank’s key interest rate would not rise before the first quarter of next year, citing increased electricity prices and high-speed rail tickets, which he said would gradually increase inflationary pressures.

Barclays Capital also forecast that the central bank would maintain its rates, adding that the nation’s economic recovery has been slow and inflation remains moderate.

Separately, the nation’s industrial production index is likely to show year-on-year growth for last month, extending a gain driven by solid global demand for handheld electronic devices, the Ministry of Economic Affairs said on Saturday.

The ministry is scheduled to release the data today.

With economic fundamentals in the EU and the US recovering at a mild pace, consumption has been rising during the Christmas shopping season, the ministry said.

In particular, buying interest in the global market has been sparked by the launch of new handheld electronic devices, paving the way for increased shipments by local manufacturers, the ministry said.

Demand has been growing in China for select high-tech gadgets from Taiwan, as Chinese vendors build up their inventories to prepare for increased demand during the Lunar New Year holiday, which starts at the end of next month, the ministry said.