The central bank yesterday published the minutes of its June policy meeting, showing that all board members lent support to the bank’s monetary policy and its view on the “status quo,” as the nation’s economic growth momentum is forecast to lose pace in the second half of the year.
It is the first time the bank disclosed the minutes of its board meeting as it seeks to increase transparency and accountability, although the minutes did not disclose the identify of the board directors.
“The strength in Taiwan’s economic recovery might be dampened going forward by limited growth in exports and slow upturns in private consumption and private investment,” board directors said, according to the minutes.
Although the economy has gradually recovered from a trough in 2015, the nation might still face a long-term trend of low growth amid a weak global recovery, they said.
Some international research institutions revised down their growth forecasts for global GDP and trade for the coming years as uncertainty lingers and structural problems require more time to resolve, one of the directors said.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) in May set this year’s GDP growth target at 2.05 percent, with the second half of the year expected to contribute a smaller share, as low comparison base benefits run out.
Slower growth in exports and capital equipment imports, as well as lackluster retail sales, might put a drag on economic growth, the board said.
The DGBAS is due to update its growth forecast later this month. The preliminary second-quarter data missed the target by a small margin.
The inflationary pressure was mild in the first half and might remain benign for the rest of this year, allowing room for a loose monetary stance, the central bank’s board said.
“International oil prices stay low while domestic demand growth is still slow and the output gap continues to be negative,” the board said.
The minutes showed that all directors approved of the nation’s interest rates as economic growth stood at an appropriate level, while some major economies have implemented negative interest rates.
One member voiced concerns about the New Taiwan dollar appreciating faster than the yen, the won, the yuan, the Singapore dollar and the euro.
The overall financial conditions have tightened because of the appreciation of the NT dollar, they said.
Another member said that rising share prices helped mitigate a tightening in financial conditions, but the wealth effect mainly benefited foreign investors, who hold about 40 percent of local shares.
Foreign funds exited the local market last month after receiving dividend payments, Financial Supervisory Commission data showed.
The decision to hold interest rates steady in June was unanimous, the 30-page minutes showed.
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