The public tends to expect the central bank to pursue a monetary policy that is anti-inflationary, counter-cyclical and able to balance the needs of exporters, importers, average income earners and big business.
However, the central bank is not all-powerful, so most people have long supported its independence and ability to defend its credibility in the face of market and political pressure.
The central bank on Thursday released the minutes of its June 22 policy meeting for the first time in its history, a move that follows in the footsteps of most major economies to bring greater transparency and communication.
The action also aims to enhance the bank’s accountability, as Governor Perng Fai-nan (彭淮南) is expected to step down in February next year, its first change of leadership in 20 years.
The minutes show that the interest rate decision was unanimous — all 15 board members believed that monetary tightening should not be pursued at this stage, considering that inflationary pressure might remain benign in the second half of this year, while economic growth is likely to weaken due to limited export growth and slow upturns in private consumption and investment.
All board members voted to maintain the bank’s rediscount rate at 1.375 percent, the minutes said.
The minutes also revealed the bank’s GDP growth forecast of 2.13 percent and its inflation rate forecast of 1.07 percent for this year, which are not far from the Directorate-General of Budget, Accounting and Statistics’ estimates made in May of 2.05 percent and 0.95 percent respectively.
However, apart from an economic overview by board members, the minutes showed some members’ concerns about the effects of foreign capital flows and a high foreign ownership rate of Taiwanese stocks, as well as worries by other participants about the New Taiwan dollar’s appreciation this year and its tightened effect on the local financial system.
Several members also addressed a narrowing yield spread between US Treasury bonds and Taiwan’s government bonds despite the US Federal Reserve’s consecutive rate hikes this year, and said that its effect on capital flows and currency exchange rates is worth watching.
Overall, the bank’s first-ever release of meeting minutes represents its board’s willingness to communicate with the public, conveying one important message: There was no tightening bias among board members. However, from a long-term perspective, releasing the minutes reveals board members’ views on some key issues and their votes on interest-rate adjustments.
Therefore, it will add pressure on participants to better prepare for subsequent meetings and is likely to foster a more healthy debate on monetary policies.
Even so, there is still room to improve the board’s transparency and accountability in its decisionmaking, because the minutes did not disclose the identity of participants in certain discussions.
Perng, who assumed the position in February 1998, is the nation’s longest-serving central bank governor. The decision to release the minutes sets an example for his successor, as Perng has come to realize the importance of transparency and is all too aware of criticism of his authoritarian leadership style.
However, the real challenges for the future governor and the board lie in accepting that markets are messy places and policy missteps can lead to economic disasters, not to mention acting on the basis of their professional skills and based on their beliefs.
China badly misread Japan. It sought to intimidate Tokyo into silence on Taiwan. Instead, it has achieved the opposite by hardening Japanese resolve. By trying to bludgeon a major power like Japan into accepting its “red lines” — above all on Taiwan — China laid bare the raw coercive logic of compellence now driving its foreign policy toward Asian states. From the Taiwan Strait and the East and South China Seas to the Himalayan frontier, Beijing has increasingly relied on economic warfare, diplomatic intimidation and military pressure to bend neighbors to its will. Confident in its growing power, China appeared to believe
After more than three weeks since the Honduran elections took place, its National Electoral Council finally certified the new president of Honduras. During the campaign, the two leading contenders, Nasry Asfura and Salvador Nasralla, who according to the council were separated by 27,026 votes in the final tally, promised to restore diplomatic ties with Taiwan if elected. Nasralla refused to accept the result and said that he would challenge all the irregularities in court. However, with formal recognition from the US and rapid acknowledgment from key regional governments, including Argentina and Panama, a reversal of the results appears institutionally and politically
In 2009, Taiwan Semiconductor Manufacturing Co (TSMC) made a welcome move to offer in-house contracts to all outsourced employees. It was a step forward for labor relations and the enterprise facing long-standing issues around outsourcing. TSMC founder Morris Chang (張忠謀) once said: “Anything that goes against basic values and principles must be reformed regardless of the cost — on this, there can be no compromise.” The quote is a testament to a core belief of the company’s culture: Injustices must be faced head-on and set right. If TSMC can be clear on its convictions, then should the Ministry of Education
Legislators of the opposition parties, consisting of the Chinese Nationalist Party (KMT) and the Taiwan People’s Party (TPP), on Friday moved to initiate impeachment proceedings against President William Lai (賴清德). They accused Lai of undermining the nation’s constitutional order and democracy. For anyone who has been paying attention to the actions of the KMT and the TPP in the legislature since they gained a combined majority in February last year, pushing through constitutionally dubious legislation, defunding the Control Yuan and ensuring that the Constitutional Court is unable to operate properly, such an accusation borders the absurd. That they are basing this
RSS