The central bank yesterday held its policy rates steady for the fourth consecutive quarter, as economic uncertainty escalates and inflation slows, but stays elevated.
Inflation remains the bank’s top priority although US President Donald Trump’s trade policies cast a shadow over the global economic landscape, central bank Governor Yang Chin-long (楊金龍) said at a news conference after the bank’s quarterly board meeting.
“There is no room for monetary easing amid a stable economy, despite a lingering negative output gap,” Yang said.
Photo: CNA
The consumer price index (CPI) is projected to grow a benign 1.89 percent this year, while core CPI would advance 1.79 percent, he said.
The inflation reading could accelerate to 2.04 percent if state-run electricity, water and railway service providers all raise charges, Yang said.
Taiwan Power Co (台電), Taiwan Water Corp (台水) and Taiwan Railway Corp (台鐵) have all announced plans to increase fees to maintain healthy operations.
Yang said policymakers refrained from a pre-emptive rate hike because inflation readings have demonstrated a subdued trajectory, while local shares and real estate have endured price corrections due to a negative environment triggered by Trump’s tariff threats.
The central bank cut its forecast for the nation’s GDP growth this year from 3.13 percent to 3.05 percent, as Trump’s deglobalization moves would have a negative, though limited impact on Taiwan.
Yang said that he is worried about an upcoming currency report by the US Department of the Treasury that has placed Taiwan on its currency watch list in the past few years.
Taiwan’s trade surplus with the US has sharply widened due to aggressive demand from US technology giants for Taiwanese chips and servers used to develop artificial intelligence capabilities, he said.
Yang said that he is not sure about the so-called reciprocal tariff policy the Trump administration has pledged to introduce on April 2, adding that Taiwan’s tariffs are quite friendly in this regard, except for agricultural products.
US Secretary of the Treasury Scott Bessent in an interview with Fox News on Tuesday said that there are nations called the “dirty 15” that impose substantial tariffs on the US, judging by last year’s import and export data. Many have speculated that Taiwan could be included on the list and is facing the risk of reciprocal tariffs by the US.
Yang said Taiwan and the US have forged a mutually beneficial partnership whereupon US technology brands have made a fortune by relying on electronic components manufactured by Taiwanese suppliers.
Taiwan has the seventh-largest trade surplus with the US, at US$7.39 billion last year, after China, the EU, Mexico, Vietnam, Ireland and Germany, US customs data showed.
Japan, South Korea, Canada, India, Thailand, Italy, Switzerland and Malaysia also recorded sizeable trade surpluses with the US.
Asked about the impact of economic uncertainty on the New Taiwan dollar, Yang said the foreign exchange market would have the final say on the local currency’s value and its recent depreciation has much to do with foreign portfolio managers taking profits by selling local shares, mainly Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
TSMC’s plan to build three more plants in the US would not weigh on the New Taiwan dollar since the chipmaker would carry out the investment plan over a number of years and it could do so by issuing debt on the US market, he said.
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
RSS