The central bank yesterday kept its policy rate at 2 percent and maintained housing loan restrictions, granting only limited flexibility for first-home mortgage applications amid persistent loan concentration concerns.
The bank’s move came after the nation’s GDP growth in the first half of the year reached 6.75 percent, propelled by strong demand for hardware used in artificial intelligence (AI), bank Governor Yang Chin-long (楊金龍) told a news conference in Taipei following the bank’s quarterly board meeting.
Suppliers of hardware for AI products have benefited from the global AI boom, bolstering exports and supporting overall economic activity, Yang said.
Photo: CNA
However, non-technology sectors have seen near-zero growth, weighed down by US tariffs and lingering oversupply in China, underscoring the economy’s divergence and the need for cautious policymaking, he said.
Yang projected growth in the second half of the year to slow to 2.51 percent, leaving full-year GDP at 4.55 percent.
Inflation pressures remain broadly contained, with consumer prices returning to the 2 percent target in the past few months, giving the central bank room to hold rates unchanged even after the US Federal Reserve’s 25-basis-point rate cut over softening employment data.
Still, mortgage lending concentration continues to pose a risk to financial stability, justifying the central bank’s decision to maintain property loan limits, Yang said.
As public frustration grows over insufficient mortgage availability and extended application times following the tightening of lending rules in September last year, the central bank would offer limited support through open market operations, mainly by reducing the issuance of negotiable certificates of deposit, freeing up funds for banks to lend, he said.
A proposed reduction in lenders’ required reserve ratios is seen as less effective, he added.
Many homebuyers have reported insufficient mortgages, averaging 70 percent of purchase prices, down from 80 to 85 percent at earlier contract signing, prompting the Cabinet earlier this month to push for “proper easing” measures.
The Financial Supervisory Commission exempted first-home mortgages from the 30 percent cap on housing loans.
Yang said that measure is sufficient, and the central bank would allow state-run lenders — the primary providers of favorable loans to first-home buyers — some leeway if they miss targets for curbing overall real-estate lending.
Private-sector banks, with greater liquidity, could also step in to help, he added.
Yang described the bank’s monetary stance as “tightening-leaning,” and said that policy adjustments would only be considered if Taiwan’s technology firms — the backbone of exports and GDP growth — show signs of a slowdown.
Looking ahead, demand for emerging technology applications is expected to remain strong, although US tariffs might weigh on global trade, moderating Taiwan’s exports and private investment, he said.
Private consumption could rebound, supporting GDP growth of 2.68 percent next year, Yang said.
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
PRICE HIKES: The war in the Middle East would not significantly disrupt supply in the short term, but semiconductor companies are facing price surges for materials Taiwan’s semiconductor companies are not facing imminent supply disruptions of essential chemicals or raw materials due to the war in the Middle East, but surges in material costs loom large, industry association SEMI Taiwan said yesterday. The association’s comments came amid growing concerns that supplies of helium and other key raw materials used in semiconductor production could become a choke point after Qatar shut down its liquefied natural gas (LNG) production and helium output earlier this month due to the conflict. Qatar is the second-largest LNG supplier in the world and accounts for about 33 percent of global helium output. Helium is
About 1,000 participants, including more than 200 venture capitalists, joined the Taiwan Demo Day in Silicon Valley on Saturday, the largest iteration to date of the event held ahead of Nvidia Corp’s annual GPU Technology Conference which runs from today to Thursday. Taiwan Demo Day, co-organized by the Taiwan Next Foundation and the Startup Island Taiwan Silicon Valley Hub, took place at the Computer History Museum in California, showcasing 12 teams focused on physical artificial intelligence (AI) and agentic AI technologies. Katie Hsieh (謝凱婷), founder of the Taiwan Next Foundation, said the event highlighted the strength of the Taiwan-US start-up ecosystem, with
DOMESTIC COMPONENT: Huang identified several Taiwanese partners to be a key part of Nvidia’s Vera Rubin supply chain, including Asustek, Hon Hai and Wistron Nvidia Corp chief executive officer Jensen Huang (黃仁勳), addressing crowds at the company’s biggest annual event, unveiled a variety of new products while predicting that its flagship artificial intelligence (AI) processors would help generate US$1 trillion in sales through next year. During a two-and-a-half-hour keynote address, Huang announced plans to push deeper into central processing units (CPUs) — Intel Corp’s home turf — and introduced semiconductors made with technology acquired from start-up Groq Inc. The company even said it was developing chips for data centers in outer space. At the heart of Huang’s speech was the message that demand for computing power
RSS