The central bank yesterday kept its policy rates unchanged as it took cues from the US Federal Reserve’s announcement overnight, and tightened lending terms for second-home mortgages in some municipalities.
Taiwan’s central bank cut its GDP growth forecast for this year from 2.21 percent to 1.72 percent and raised its consumer price index (CPI) projection from 2.09 percent to 2.24 percent.
“Fighting inflation remains our top priority, but we think it is time to pause and see how previous rate hikes will affect inflation and the economy,” central bank Governor Yang Chin-long (楊金龍) told a news conference after the bank’s quarterly board meeting.
Photo: CNA
The discount rate would stay unchanged at 1.875 percent, the collateralized refinancing rate would stay at 2.25 percent and the unsecured lending would remain 4.125 percent, the bank added.
Yang said he cannot rule out resuming interest rate hikes if inflationary readings veer from the bank’s 2 percent target.
Entertainment and rent costs, as well as wage increases, have boosted the CPI and hindered efforts to reduce inflation, Yang said, adding that inflation driven by the service sector would persist until supply and demand reach an equilibrium.
That explains why central banks worldwide are more willing to live with high inflation and wait to achieve their 2 percent targets next year or in 2025, he said.
Economic weakness at home and abroad warrants the tempered approach, he added.
The central bank is more conservative than the Directorate-General of Budget, Accounting and Statistics (DGBAS) about Taiwan’s export and private investment outlook, and less upbeat about private consumption.
The statistics agency last month forecast GDP growth of 2.04 percent for this year.
The Fed said that a rate pause would give it more time to observe the cumulative and lagging effects of earlier interest rate hikes.
Taiwan’s central bank has raised rates by 75 basis points since March last year to curb inflation.
Last month, the CPI rose 2.02 percent from a year earlier, the slowest rise since July 2021, DGBAS data showed.
The central bank yesterday also lowered the loan-to-value (LTV) ratio for second-home mortgages from 75 percent to 70 percent in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung, as well as Hsinchu City and County.
The move came after house loans climbed to 37 percent of overall lending in April, from 36.83 percent in December last year, while the LTV ratios increased from 75.5 percent to 77 percent, warranting further selective credit controls, Yang said.
Hopefully, the move would help prevent capital from flowing to the real-estate sector, he said.
The combined effect of the monsoon, the outer rim of Typhoon Fengshen and a low-pressure system is expected to bring significant rainfall this week to various parts of the nation, the Central Weather Administration (CWA) said. The heaviest rain is expected to occur today and tomorrow, with torrential rain expected in Keelung’s north coast, Yilan and the mountainous regions of Taipei and New Taipei City, the CWA said. Rivers could rise rapidly, and residents should stay away from riverbanks and avoid going to the mountains or engaging in water activities, it said. Scattered showers are expected today in central and
People can preregister to receive their NT$10,000 (US$325) cash distributed from the central government on Nov. 5 after President William Lai (賴清德) yesterday signed the Special Budget for Strengthening Economic, Social and National Security Resilience, the Executive Yuan told a news conference last night. The special budget, passed by the Legislative Yuan on Friday last week with a cash handout budget of NT$236 billion, was officially submitted to the Executive Yuan and the Presidential Office yesterday afternoon. People can register through the official Web site at https://10000.gov.tw to have the funds deposited into their bank accounts, withdraw the funds at automated teller
COOPERATION: Taiwan is aligning closely with US strategic objectives on various matters, including China’s rare earths restrictions, the Ministry of Foreign Affairs said Taiwan could deal with China’s tightened export controls on rare earth metals by turning to “urban mining,” a researcher said yesterday. Rare earth metals, which are used in semiconductors and other electronic components, could be recovered from industrial or electronic waste to reduce reliance on imports, National Cheng Kung University Department of Resources Engineering professor Lee Cheng-han (李政翰) said. Despite their name, rare earth elements are not actually rare — their abundance in the Earth’s crust is relatively high, but they are dispersed, making extraction and refining energy-intensive and environmentally damaging, he said, adding that many countries have opted to
PEACE AND STABILITY: Maintaining the cross-strait ‘status quo’ has long been the government’s position, the Ministry of Foreign Affairs said Taiwan is committed to maintaining the cross-strait “status quo” and seeks no escalation of tensions, the Ministry of Foreign Affairs (MOFA) said yesterday, rebutting a Time magazine opinion piece that described President William Lai (賴清德) as a “reckless leader.” The article, titled “The US Must Beware of Taiwan’s Reckless Leader,” was written by Lyle Goldstein, director of the Asia Program at the Washington-based Defense Priorities think tank. Goldstein wrote that Taiwan is “the world’s most dangerous flashpoint” amid ongoing conflicts in the Middle East and Russia’s invasion of Ukraine. He said that the situation in the Taiwan Strait has become less stable
RSS