The central bank yesterday kept policy rates unchanged for the 10th consecutive quarter, saying that a global economic slowdown and the US-China trade dispute merited a lenient policy.
The monetary policymaker trimmed its GDP growth forecast for this year to 2.68 percent from the 2.7 percent it predicted in September, and is anticipating a 2.33 percent pickup next year.
“The domestic stock rout has taken a toll on consumer spending, while economic weakness in major trading partners might dampen external demand,” central bank Governor Yang Chin-long (楊金龍) told a news conference after the bank’s quarterly board meeting.
Against this backdrop, the board unanimously agreed to hold the rediscount rate steady at 1.375 percent, the collateralized loan rate at 1.75 percent and the unsecured loan rate at 3.625 percent.
The downward GDP growth revision came after international research institutes cut forecasts for major economies and turned cautious, Yang said.
Taiwan, home to some of the world’s biggest electronic component suppliers, is susceptible to cyclical global technology corrections and effects of hostile tariff exchanges between Washington and Beijing, as such components account for more than half of all exports.
A conservative outlook led the bank to keep its target range for broad money supply next year unchanged at 2.5 percent to 6.5 percent, Yang said.
The bank expects consumer prices to increase 1.05 percent next year, while the consumer price index, a reliable long-term price tracker, would advance at a milder 0.93 percent, Yang said.
International oil prices have stabilized, easing imported inflationary pressures, the governor said, adding that stable consumer prices gave the bank room to adopt an accommodative monetary policy.
Yang declined to comment on policy rate changes next year, saying that the bank would base its decisions on the latest economic figures.
“Moves by other central banks will serve as a reference, but will not be the decisive factor,” he said.
Yang, who has a doctorate in economics, declined to comment on movements of the US dollar or capital flows, saying that most predictions have proved to be inaccurate.
He dismissed criticism that the bank failed to do anything to curb capital flight to pursue higher returns in US dollar-denominated assets following a series of rate hikes by the US Federal Reserve.
The capital outflows wreaked havoc on the local bourse, but also led to higher dividend payouts this year, Yang said.
Dividend payouts this year totaled NT$1.4 trillion (US$45.3 billion), up 11.8 percent from last year, with NT$460 billion wired overseas to foreign investors, the bank said.
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