The central bank yesterday cut its policy rates by 12.5 basis points and removed all credit controls on housing transactions, except for luxury homes, as the economy continued to deteriorate and housing transactions fell to a 14-year low.
The rate cut, the third since September last year, came after the economy slipped into a recession, with GDP contracting for the past two quarters, and looked set to remain in negative territory this quarter and beyond.
“A rate cut is favorable to maintaining financial stability and boosting confidence when exports fare poorer than expected amid global headwinds,” central bank Governor Perng Fai-nan (彭淮南) told a news conference after the bank’s quarterly board meeting.
Photo: Chen Chih-chu, Taipei Times
The central bank lowered the rediscount rate to 1.5 percent, the collateralized loan rate to 1.875 percent and the unsecured loan rate to 3.75 percent.
However, monetary policy alone cannot turn the economy around, and the public and private sectors should join forces in directing the nation’s excess savings to private investments, Perng said.
The Australia and New Zealand Banking Group (ANZ) said the latest rate cut could discourage capital inflows that have muted the New Taiwan dollar’s fall this year.
“The central bank is wary of capital inflows due to the monetary easing by peers in Europe and Japan,” Hong Kong-based ANZ economist Raymond Yeung (楊宇霆) said in a note.
Perng said he saw no need to keep various mortgage restrictions introduced since June 2010 because they have achieved their purpose of curbing property speculation.
The central bank had subjected houses in Taipei and 15 popular areas of New Taipei City to a mortgage ceiling of 60 percent due to their soaring prices in recent years. The restriction had also extended to multiple home owners and corporate buyers nationwide.
“Housing prices have corrected across the nation, with transactions last year plunging to the lowest level since the technology bubble burst in 2002,” Perng said.
However, the central bank is keeping the 60 percent cap for houses valued at NT$70 million (US$21.39 million) or more in Taipei, NT$60 million in New Taipei City and NT$40 million elsewhere, citing loan overconcentration among lenders.
“Internal data suggest a continued need for credit controls on luxury housings despite a sluggish market,” Perng said.
Luxury housing, especially in the capital, has borne the brunt of tightening measures, particularly a sharp increase in house taxes.
Sinyi Realty Inc (信義房屋), the nation’s only listed real-estate broker, said the loosened credit controls might introduce a healthy dose of confidence to the market without reviving property fever.
“The [central bank’s] sends a message, that the government is suspending policies that are unfavorable to the market,” Sinyi researcher Tseng Chin-der (曾敬德) said, adding that “sentiment should turn from negative to neutral.”
The central bank also scrapped a loan ceiling of 65 percent for land deals.
‘NO SECURITY RISK’: The Railway Bureau reassured the public that the technicians’ activities were limited to technical guidance and did not involve sensitive systems The Railway Bureau yesterday said it had invited eight Chinese technicians to assist with an airport MRT construction project. The bureau issued the confirmation after an Internet user said Chinese nationals had entered the construction zone of Taiwan Taoyuan International Airport’s Terminal 3 project. They asked why “individuals from an enemy state” were allowed access to such a major national infrastructure project, which raised serious concerns over Taiwan’s industrial safety, sensitive systems and information security. The bureau’s Northern Region Engineering Branch Office said subcontractor Taiwan Handle Industrial Co (台灣手把工業) of the Taoyuan airport MRT’s “Contract No. CU05 Project A14 Station Civil, MEP &
A US uncrewed surface vessel (USV) encountered multiple Chinese warships during an autonomous transit of the Taiwan Strait, US defense company Seasats said in a statement on Wednesday. Seasats announced that a Lightfish USV had completed the first autonomous transit of the Taiwan Strait. Over five days, the USV traversed the entire length of the Strait while constantly monitoring surface vessel traffic, the company said. The Lightfish encountered multiple Chinese warships, one of which was a Chinese People’s Liberation Army Navy (PLAN) Type 056 corvette, it said. The Chinese vessels were operating “well within Taiwan’s exclusive economic zone without transmitting their identity via the
Taiwan is still in the process of assessing the possibility of recruiting workers from Eswatini, the Ministry of Foreign Affairs said yesterday, adding that its goal is to help Eswatini upgrade its vocational training centers. If there are plans to recruit workers from Eswatini, safeguarding national security, protecting public health and ensuring the employment rights of Taiwanese would be prerequisites, Department of West Asian and African Affairs Director-General Yen Chia-liang (顏嘉良) told a news conference. Key considerations would also include filling labor shortages in specific industries, and fostering bilateral professional and technical exchanges, he said. Yen was asked about the progress of labor
The nation’s usually punctual high-speed rail system yesterday was hit by major disruptions after all scheduled services were canceled and replaced with three hourly trains offering only non-reserved seating, affecting more than 200,000 passengers. Preliminary findings indicate the disruption was caused by a faulty power module in a track switch control cabinet, Taiwan High-Speed Rail Corp (THSRC) said, adding that as a full system inspection could only be conducted after operations end for the day, a decision on whether normal service would resume today would be announced before the first train departs. During a routine inspection early yesterday, a switch signal abnormality
RSS