Economists are split as to whether Taiwan’s central bank will add to its yearlong easing cycle at today’s meeting, a Bloomberg survey showed.
The monetary policy board, led by central bank Governor Perng Fai-nan (彭淮南), is expected to hold the key interest rate at 1.375 percent, according to 14 out of 26 economists surveyed between Sept. 22 and Tuesday. The other 12 forecast a reduction to 1.25 percent in what would be the fifth reduction since September last year.
Stronger-than-expected sales for Apple Inc’s new iPhone 7 are supporting electronics companies, while rising commodity prices benefit traditional industries like petrochemicals makers, said Yen Chen-hui (顏承暉), a Taipei-based strategist at Yuanta-Polaris Research Institute (元大寶華綜經院).
This quarter, there is “no need” for the central bank to help exporters by cutting the interest rate and depreciating the New Taiwan dollar, Yen said.
Export orders jumped 8.3 percent last month from a year earlier — the first expansion in 17 months — on rising demand for the components inside handheld devices as well as electrical machinery. Industrial production in the same month rose 7.74 percent, in part on electronics and also on rising oil prices.
On the other side of the split projection are those who see a more prolonged L-shaped recovery for the global economy. The effect of the iPhone might not last beyond one or two quarters, said Ma Tieying (馬鐵英), a Singapore-based economist at DBS Bank.
In the meantime, with the US holding off on raising rates, Taiwan can enact a cut without having to worry too much about capital outflows, Ma said.
The government last month revised its GDP growth estimate for this year to a 1.22 percent expansion, up from 1.06 percent.
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