Central bank Governor Yang Chin-long (楊金龍) yesterday indicated that inflation is becoming less of a concern for Taiwan’s economy, comments that come a week before a key decision on interest rates by the monetary policymaker and also ahead of the Directorate-General of Budget, Accounting and Statistics (DGBAS) releasing inflation data for last month.
The consumer price index (CPI) last month rose 2.24 percent from a year earlier, accelerating from a revised 1.94 percent increase in April, the DGBAS reported yesterday.
“CPI, core CPI, important staples prices and prices of commonly purchased items are gradually falling,” Yang told lawmakers during a regular question-and-answer session at a meeting of the Finance Committee at the legislature in Taipei. “The economy is recovering, but it’s not very strong.”
Photo: Liao Chen-hui, Taipei Times
The central bank would take into account global monetary policy conditions when it sets interest rates, Yang said.
Those remarks came as Canada took the lead in G7 nations cutting rates.
Taiwan’s interest-rate swaps (IRS) — a measure of trader expectations for rate hikes — fell after Yang’s remarks.
The three-year IRS dropped as much as 5.5 basis points, the most since late March.
In March, the central bank unexpectedly raised its benchmark interest rate to the highest since 2008.
Yang said at the time that “inflation has been high since 2021” and singled out concern over electricity costs.
Asked by lawmakers if the central bank would make yet another surprise next week, Yang yesterday said: “It’s not good to give surprises from time to time,” remarks that seemed to imply that the central bank might stay put this time.
Lawmakers also asked Yang if the central bank would raise rates or further tighten credit control measures for real-estate financing to battle rising housing prices.
Yang said that interest rates would not be used to influence property prices and that central bank board members would look into the property issue at a quarterly policymaking meeting on Thursday next week.
Climbing home prices are a lingering concern.
Earlier this week, the Chinese-language Commercial Times reported that some commercial lenders think the central bank might tighten mortgage lending rules at next week’s meeting.
The central bank has introduced several rounds of selective credit controls on local banks since December 2020 to cool the property market and rein in rising housing prices.
While Taiwan expects the economy to grow this year at the fastest pace since 2021, inflation has been a key concern for policymakers and the public.
Although the pace of price gains has been low compared with elsewhere in the world, even slower wage gains has meant the erosion of household earnings.
Last week, the DGBAS upgraded its GDP and CPI growth estimates for this year to 3.94 percent and 2.07 percent respectively, up from 3.43 percent and 1.85 percent it projected earlier.
The bank is expected to adjust upward its economic growth and inflation forecast next week as well.
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
RSS