Taiwan’s central bank is likely to raise interest rates by 0.125 percentage points on June 16 as it struggles to curb inflation without hurting an economy that is facing increasing headwinds, a Taipei-based economist said.
Taiwan’s consumer price index, hovering above 3 percent for the past two months, is not as serious as the 8 percent seen in the US and the EU, meriting a measured and moderate approach, said Chang Chuang-chang (張傳章), president of the Chunghua Institution for Economic Research (CIER, 中華經濟研究院).
Several central bank board members shared the same opinion during the bank’s March meeting, but decided on an interest rate hike of 0.25 percentage points.
Photo: CNA
Chang said that the central bank is now in a difficult position as it also must tackle growing economic downside risks induced by China’s COVID-19 restrictions and spikes in energy and raw material prices.
Manufacturers across all sectors are pessimistic about business prospects in coming six months, given the latest manufacturing purchasing managers’ report, while COVID-19 infections locally are diminishing business in finance, retail, restaurants, hotels and transportation, Chang said.
The backdrop renders a slight rate hike of 0.125 percentage points a wise option to curb inflation and slow capital flight, he said.
Global funds have swiftly left emerging markets this year to purse better yields in the US, where the US Federal Reserve has made clear it would raise interest rates by 0.5 percentage points in upcoming policy meetings.
Rate hikes are not the only policy tool in battling inflation, and Taiwan’s central bank does not need to follow the Fed’s lead, Chang said.
The Directorate-General of Budget, Accounting and Statistics last month trimmed its forecast for the nation’s GDP growth this year from 4.42 percent to 3.91 percent, reflecting unfavorable economic uncertainty, he said, adding that steep rate hikes would add financial burdens to an average family.
More than 70 percent of Taiwanese families have mortgage obligations, and interest rate hikes would increase their monthly payments, CIER vice president Wang Jiann-chyuan (王健全) said.
Interest rates for mortgage payments could rise to 2 percent next year, creating significant pressure on the housing market if the central bank hikes interest rates for the rest of this year, Wang said.
The central bank is adopting a hawkish policy stance to narrow the interest-rate gap between Taiwan and the US, which is causing ongoing capital flight, Wang said.
This time was supposed to be different. The memorychip sector, famous for its boom-and-bust cycles, had changed its ways. A combination of more disciplined management and new markets for its products — including 5G technology and cloud services — would ensure that companies delivered more predictable earnings. Yet, less than a year after memory companies made such pronouncements, the US$160 billion industry is suffering one of its worst routs ever. There is a glut of the chips sitting in warehouses, customers are cutting orders and product prices have plunged. “The chip industry thought that suppliers were going to have better control,” said
Enimmune Corp (安特羅生技) has obtained marketing approval from the Food and Drug Administration (FDA) for its EnVAX-A71 vaccine for enterovirus 71 (EV-71), becoming the nation’s first enterovirus vaccine completely made in Taiwan, it said yesterday. After spending 13 years and NT$1.5 billion (US$49.77 million) on the research and development of the vaccine, Enimmune plans to start manufacturing and marketing it by the end of March, the company said in a statement, without disclosing customer order figures. “It is possible that the vaccine would not be included in a national vaccination program initially, and consumers would need to pay for it themselves,” parent
Hon Hai Technology Group (鴻海科技集團), also known as Foxconn Technology Group (富士康科技集團) internationally, yesterday said it was confident that its performance would improve in the second half of this year. Investment plans related to electric vehicles (EVs) in different parts of the world are expected to gradually start coming to fruition, Hon Hai chairman Young Liu (劉揚偉) told reporters after leading a new year’s prayer at the company’s headquarters in New Taipei City’s Tucheng District (土城). Major challenges stemming from the COVID-19 pandemic and the Russia-Ukraine war continue to affect the global economy. However, Liu said that he expects a turnaround in
Singapore is seeing an influx of ultra-wealthy families from China looking to protect their wealth from a government that increasingly views them with suspicion. The Chinese Communist Party’s recent crackdowns on tech billionaires and tax-shy celebrities, as well as three years of “zero COVID” policies, have led many rich Chinese to look for a safe haven. Nervous over the fate of their fortunes, some of the country’s mega-rich have since booked tickets to Singapore, insiders said. The key Asian financial hub ticks all the boxes for relocating tycoons. Singapore has been ruled by one party for the past six decades, and labor strikes and
RSS