Central bank set to leave rates unchanged for 14th straight quarter - Focus Taiwan

Central bank set to leave rates unchanged for 14th straight quarter

CNA file photo
CNA file photo

Taipei, Dec. 14 (CNA) Taiwan's central bank is expected to announce no change in its key interest rates for the 14th consecutive quarter in an upcoming quarterly policymaking meeting scheduled for Dec. 19, on the back of sound economic fundamentals and mild inflationary pressure, economists said Saturday.

If the forecasts are accurate, the central bank's discount rate will remain at 1.375 percent, rates on accommodations with collateral at 1.750 percent and accommodations without collateral at 3.625 percent.

Such a decision by the local central bank will come after the U.S. Federal Reserve concluded a policymaking meeting on Wednesday, the last meeting this year, at which it left its key interest rates unchanged following three rate cuts earlier this year.

The Fed's policymaking meeting was closely watched by central banks around the world.

Liang Kuo-yuan (梁國源), President of the Yuanta-Polaris Research Institute, one of Taiwan's leading economic think tanks, told CNA that Taiwan's healthy economy means the central bank is likely to maintain its monetary policy at the quarterly meeting.

Meanwhile, the Directorate General of Budget, Accounting and Statistics raised Taiwan's gross domestic product (GDP) growth in November by 0.18 percentage points from an earlier estimate to 2.64 percent for 2019 and by 0.14 percentage points to 2.72 percent for 2020, showing Taiwan's economy is performing well, Liang said.

Moreover, Liang said forecasts indicate Taiwan will outperform neighboring countries and territories, including South Korea, Singapore and Hong Kong, which indicates the local central bank is not in a position to cut rates like other major central banks.

Huang Yin-chi (黃蔭基), the chief economist with SinoPac Financial Holding Co., said at an investment conference earlier this month that Taiwan enjoys mild inflation which is expected to continue, thereby guaranteeing no change in central bank policy.

Huang said with more and more foreign investors moving funds into Taiwan, the local central bank is in no hurry to follow its international counterparts and cut interest rates to further boost liquidity.

The central bank is also likely to keep its key interest rates at the same level for 2020, which means the bank will have left monetary policy unchanged for 18 consecutive quarters by the end of next year, he added.

Echoing Huang, Liang said as long as the trade disputes between the United States and China move in a better direction, the global economy will improve next year, a positive development for Taiwan so the central bank will not have to lower interest rates anytime soon.

On Friday, Washington and Beijing agreed to a phase one deal to resolve their disputes after long negotiations.

At the last policymaking meeting held in September, the central bank raised its forecast for Taiwan's 2019 GDP growth to 2.4 percent from its previous estimate of 2.06 percent made in the second quarter.

(By Pan Tzu-yu and Frances Huang)

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