The central bank’s board of directors last month voiced support for more interest rate hikes and selective credit controls to curb inflationary pressure and persistent housing price hikes, the minutes of a board meeting released on Thursday showed.
The hawkish tone might pave the way for more monetary tightening, in line with the stance of major central banks around the world.
During the policy meeting on March 17, several board directors rallied behind a rate hike of 0.25 percentage points, saying that such a move could help cool an overheating economy.
Unemployment rates have dropped near the level from before the COVID-19 pandemic, while GDP growth it advancing stably, one director said.
Protracted low interest rates in the past few years helped boost asset prices in Taiwan, with housing prices rising significantly in the final quarter of last year, the director said.
Inflation expectations and buying real estate as a hedge could send prices higher, the director said.
Expectations of housing price hikes have lasted more than a year, a sentiment that would grow increasingly difficult to resolve, they said.
“Raising the policy rates by 25 basis points could send an inflation-fighting message and help slow the asset price buildup, making it appropriate,” they said.
The central bank in December last year floated the possibility of rate hikes, so borrowers, including people with mortgages, should be prepared for higher interest payments, another board member said.
A rate hike would be appropriate, as consumer prices have been above the 2 percent alert level for several months and might continue to rise with the Ukraine war driving up prices for metals, fuel and agricultural produce, the second board member said.
Another board director said that there were steep price rises for existing and new homes, especially in Hsinchu City and Hsinchu County, which are home to the headquarters of major Taiwanese firms.
A mild decline in real-estate loans recently had more to do with the base effect rather than being a signal of a market turnaround, the third director said, adding that the share of real-estate lending in overall loans continued to grow.
Taiwan outranks most other countries in cumulative housing price hikes in the past 20 years, meriting discussions about additional selective credit controls, the third director said.
A fourth director expressed similar views and urged the central bank to introduce more tightening measures, if necessary.
That people plan to buy real-estate to combat inflation might mean a new round of selective credit controls is required, the fourth director said.
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