Headline inflation is expected to stay in check this year despite a spike in food prices, which is considered a key indication that the monetary policymaking body would retain benchmark interest rates during its upcoming quarterly meeting, central bank Governor Perng Fai-nan (彭淮南) said in a report prepared for an question-and-answer session at the Legislative Yuan tomorrow.
The central bank said in the report that the consumer price index (CPI) was relatively stable and rose at a slower pace than the world’s major economies. The nation’s CPI increased 1.39 percent annually in the first eight months.
However, food prices soared 4.04 percent annually in the first eight months of the year, with the cost of meat products, fruit and eating out rising at the fastest rates, the report said, citing data from the Directorate-General of Budget, Accounting and Statistics (DGBAS).
“Food price has risen faster, but a mild recovery in the global economy will drive lower prices and help keep overall inflation outlook under control,” the report said.
Under the economy’s steady growth momentum and with a mild rise in headline inflation, the bank’s tone reflected a higher possibility that policy rates may remain on hold for the 13th consecutive quarter at its board meeting on Thursday.
Also, the central bank said its move to extend credit-tightening measures on housing loans to eight additional areas in New Taipei City and Taoyuan County in late June has had some effect on maintaining financial stability and curbing speculative property transactions.
The banking sector saw the proportion of housing loans it adopted drop to 26.81 percent last month, from 27.62 percent recorded in June, with the amount of new housing loans in these newly added areas showing a significant decline, showing lighter concentration in real-estate-linked loans, data from the central bank showed.
Meanwhile, banks lowered loan-to-value (LTV) ratio for buyers of luxury homes to an average of 51.27 percent last month, down from between 85 percent and 90 percent recorded before the central bank’s warning in June, to prevent real-estate speculators from using mortgages to purchase multiple properties.
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