The central bank yesterday kept its policy rates unchanged and did not issue new credit controls, as real-estate lending slowed, but remained at high levels.
Central bank Governor Yang Chin-long (楊金龍) at a news conference after the bank’s board meeting described the neutral policy stance as “appropriate” amid slackening inflationary pressure and rising economic uncertainty.
The board decided to hold the rediscount rate steady at 2 percent, the rate on secured loans at 2.375 percent and the rate on short-term financing at 4.2 percent, Yang said.
Photo: CNA
The central bank also raised its forecast for GDP growth to 4.2 percent this year and 3.13 percent next year, without pricing in potential tariff hikes by the US.
US president-elect Donald Trump is set to increase tariffs, but their timetable, gravity and targets remain unclear, the governor said.
Yang dismissed the chance of dovish leaning, saying that tariff hikes would drive up production costs and imported inflation pressure given that Taiwan relies heavily on imported crude oil, raw materials and bulk commodities.
The governor said he took comfort in the shift in local housing market sentiment, although real-estate lending stayed at a concerning high, 37.4 percent in November, versus 37.5 percent in September when the central bank introduced broad credit controls.
“Now, first-home purchases underpin most transactions and people no longer expect housing prices to go uphill,” Yang said, adding that growth in housing and construction loans has slowed.
Yang said the central bank would step up inspections of mortgage operations at local banks next year to make sure they dutifully carry out quantitative control measures to bring down real-estate lending.
The central bank has rejected a few banks’ measures for their lack of effectiveness, Yang said.
He declined to name the lenders or elaborate to avoid “sounding unnecessarily hawkish.”
“The central bank is serious about loan diversification and would demand improvement from laggard lenders during coming inspections,” Yang said.
In particular, the central bank is seeking to root out real-estate lending that is being used for working capital or other accounts, practices that are unfavorable for the banking system’s health and stability, Yang said.
The governor painted the local currency’s depreciation yesterday as “inevitable,” after the US Federal Reserve’s hawkish guidance on its future monetary policy stance shocked the financial markets.
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