Taiwan will not follow the US in setting its monetary policy, but it would pay attention to global peers’ moves, international raw material price trends and geopolitical risks, central bank Governor Yang Chin-long (楊金龍) told a meeting of the legislature’s Finance Committee yesterday.
“There is no need for Taiwan to follow the US monetary decisions,” as the US Federal Reserve is widely believed to raise interest rates by 50 basis points next month in another of six more rate hikes for this year to curb inflation, Yang said.
US inflation last month hit 8.5 percent, while Taiwan’s rose 3.27 percent, rendering drastic rate hikes unwarranted, he said.
Photo: CNA
Rather, the central bank will approach the matter by taking into consideration policy moves by global peers, inflationary pressures at home, and international fuel and raw material price movements, he said.
In addition, the central bank will seek to support the nation’s economy to meet its duty, he said.
Yang said he stood by the view that Taiwan could achieve a GDP growth of 4 percent this year, although international research bodies have cut their forecast to an average of 3.8 percent after Russia invaded Ukraine in February and crude prices have since shot up.
Consumer prices in Taiwan are likely to ease next quarter, although the landscape is teeming with uncertainties, Yang said.
The central bank will make its quarterly decisions guided by the latest global and domestic economic data, Yang said, while acknowledging that the ongoing weakening of the New Taiwan dollar against the greenback is lending force to inflation.
Consumer prices picked up 0.1 to 0.17 percentage points after the NT dollar recently softened from NT$28 to NT$29 versus the US currency, Yang said, describing the extra inflationary burden as moderate.
A weak NT dollar will not necessarily become a norm, but has much to do with global funds responding to the Fed’s rate hikes and asset adjustments, he said.
“The market will have the final say on the NT dollar’s movements, but it remains the best performer in the past two years, thanks to Taiwan’s robust economy and corporate profitability,” Yang said.
The governor reiterated that the rate hike on March 17 is not aimed at cooling the property market, even though it inevitably sent unfavorable messages.
The central bank would favor selective credit controls to prevent funds from overflowing to the property market, he said.
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