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.
Photo: CNA
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.
The Investment Commission yesterday approved a Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) application to invest an additional US$3.5 billion in its Arizona subsidiary to manufactured advanced chips. The world’s largest contract chipmaker’s board of directors last month approved the funding project after TSMC started moving manufacturing equipment into the fab in December last year in preparation for the production of 4-nanometer chips next year. TSMC said it has also commenced the second phase of facility construction in Arizona. The second fab is to produce semiconductors using 3-nanometer technology in 2026. Altogether, TSMC plans to spend US$40 billion on the Arizona fabs, doubling its
KEY SECTOR: Taiwan’s new chip legislation is insufficient, and a more strategic ‘chip act’ that covers the whole semiconductor ecosystem is needed, MediaTek’s chairman said MediaTek Inc (聯發科) chairman Rick Tsai (蔡明介) yesterday urged the government to formulate a state semiconductor strategy and comprehensive “chip act” that includes local chip designers and smaller-scale semiconductor companies, as they are facing intensifying competition from China. The government is playing an increasingly important role in safeguarding the local semiconductor industry’s competitiveness, given that the US, the EU and Japan are offering hefty subsidies and significant tax incentives to build semiconductor capacity domestically, as they have realized the strategic importance of semiconductors, Tsai said. To implement such a program, the government should take steps to finance a “chip act,” Tsai said
Microsoft Corp has threatened to cut off access to its Internet search data, which it licenses to rival search engines, if they do not stop using it as the basis for their own artificial intelligence (AI) chat products, people familiar with the dispute have said. The software maker licenses the data in its Bing search index — a map of the Internet that can be quickly scanned in real time — to other companies that offer Web search, such as Apollo Global Management Inc’s Yahoo and DuckDuckGo. Last month, Microsoft integrated a cousin of ChatGPT, OpenAI’s AI-powered chat technology, into Bing. Rivals
MOUNTING PRESSURE: Although bank failures in the US and Europe would not cause systemic risks, it would dampen consumers’ willingness to spend, GlobalWafers said GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer supplier, yesterday said that the financial turmoil in the US and Europe has dimmed the outlook for chip demand in the second half of this year, as growing economic uncertainty could dampen consumer spending. The Hsinchu-based wafer manufacturer said it is seeing greater pressure from economic uncertainty on the industry’s recovery, as customers would have not expected Silicon Valley Bank, Signature Bank and a tier-one bank like Credit Suisse Group SA to collapse suddenly. Although the failures are unlikely to cause systemic risks, consumers would be cautious of spending on non-essential items, such
RSS