The central bank is expected to hold the nation’s policy rate at 1.875 percent at its board meeting on Thursday, given that Taiwan’s downside risks on economic growth led by recent global uncertainties have outweighed inflationary pressures, economists said.
This would be the first time that the bank has held the policy rate in more than a year after increasing it for the past five straight quarters, bringing Taiwan’s discount rate from 1.25 percent to 1.875 percent.
“It is less likely that the central bank will raise the rates for now, as relatively mild inflation and rising economic uncertainties have lowered the necessity of a rate hike,” National Taiwan University finance professor Shen Chung-hua (沈中華) said by telephone yesterday.
Although a low interest rate may hurt local banks’ profits by squeezing the spread between their lending rates and the central bank’s benchmark rates, the debt crisis in the US and Europe may make the central bank suspend the pace of rate increases, Shen added.
Wu Chung-shu (吳中書), president of the Chung-Hua Institution for Economic Research (中華經濟研究院), shared Shen’s view.
“I see no need for the central bank to raise the policy rates again amid the nation’s slowing economic growth and lowering inflationary pressure,” Wu said at a conference on Friday.
Economists at Standard Chartered Bank and Citigroup also expected the central bank to keep policy rates unchanged.
Tony Phoo (符銘財), a Taipei-based economist at Standard Chartered Bank, said the weaker-than-expected industrial output data, alongside poor export orders and rising concerns about the global economic outlook, have intensified because recent market turmoil may have undermined market confidence.
“These add to further support that the central bank will consider putting on hold its modest tightening stance when it meets next week,” Phoo said in a note on Friday.
Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup in Taipei, reiterated that an interest rate cut for Taiwan would be too early to call, because economic growth only appears to be shifting gear from an above-trend to a trend growth, and not to recession status yet.
However, Barclays Capital maintained its forecast that the central bank would raise the policy rate by 12.5 basis points, saying the impending launch of Apple Inc’s newest iPhone, coupled with the emergence of the seasonal pre-Christmas sales lift, could boost orders down the electronics value chain.
However, the brokerage house revised downward its forecast for the central bank’s increase on rates of 90-day negotiable certificates of deposit (NCD) amid the recent re-appraisal of economic growth.
“We look for a smaller 3 to 4 basis points pass-through into 90-day NCD rates, from 8 to 9 basis points estimated before,” Barclays said.
South Korea has adjusted its electronic arrival card system to no longer list Taiwan as a part of China, a move that the Ministry of Foreign Affairs said would help facilitate exchanges between the two sides. South Korea previously listed “Taiwan” as “Taiwan (China)” in the drop-down menus of its online arrival card system, where people had to fill out where they came from and their next destination. The ministry had requested South Korea make a revision and said it would change South Korea’s name on Taiwan’s online immigration system from “Republic of Korea” to “Korea (South),” should the issue not be
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
Tainan, Taipei and New Taipei City recorded the highest fines nationwide for illegal accommodations in the first quarter of this year, with fines issued in the three cities each exceeding NT$7 million (US$220,639), Tourism Administration data showed. Among them, Taipei had the highest number of illegal short-term rental units, with 410. There were 3,280 legally registered hotels nationwide in the first quarter, down by 14 properties, or 0.43 percent, from a year earlier, likely indicating operators exiting the market, the agency said. However, the number of unregistered properties rose to 1,174, including 314 illegal hotels and 860 illegal short-term rental
INFLATION UP? The IMF said CPI would increase to 1.5 percent this year, while the DGBAS projected it would rise to 1.68 percent, with GDP per capita of US$44,181 The IMF projected Taiwan’s real GDP would grow 5.2 percent this year, up from its 2.1 percent outlook in January, despite fears of global economic disruptions sparked by the US-Iran conflict. Taiwan’s consumer price index (CPI) is projected to increase to 1.5 percent, while unemployment would be 3.4 percent, roughly in line with estimates for Asia as a whole, the international body wrote in its Global Economic Outlook Report published in the US on Monday. The figures are comparatively better than the IMF outlook for the rest of the world, which pegged real GDP growth at 3.1 percent, down from 3.3 percent
RSS