Focus Taiwan App

COST OF LIVING/Central Bank has no plans to cut interest rates: bank governor

07/10/2024 09:34 PM
To activate the text-to-speech service, please first agree to the privacy policy below.
Central Bank Governor Yang Chin-long (left). CNA photo July 10, 2024
Central Bank Governor Yang Chin-long (left). CNA photo July 10, 2024

Taipei, July 10 (CNA) Taiwan's central bank governor said Wednesday the bank has no plans to lower interest rates and noted that interest rate policy should not be solely contingent on the real estate market.

The head of Taiwan's central bank, Yang Chin-long (楊金龍), made the comments when answering lawmakers' questions during a legislative committee meeting.

As many central banks around the globe have gradually shifted their monetary policy from tightening to loosening, the world has been closely watching whether the U.S. Federal Reserve will cut interest rates.

However, Taiwan's central bank decided to go its own way, raising interest rates 12.5 basis points in March. In June, it kept its benchmark interest rates unchanged but also decided to raise the required Taiwan dollar deposit reserve ratio, which is the proportion of deposits regulators require banks to hold in reserve and not loan, by 25 basis points, thereby maintaining a tightening monetary policy.

June 13: Central bank leaves interest rates unchanged, raises RRR

On Wednesday, when asked by lawmakers whether the central bank has a timeline on interest rate cuts, Yang said the bank at present has no plans to cut interest rates.

Yang added, however, that if central banks around the world all move to cut interest rates, the spillover effects could impact Taiwan and then the central bank would need to evaluate domestic and external situations when making monetary policy decisions.

During the meeting, a lawmaker indicated home loan buyers are highly concerned about the central bank's interest rate decisions given that rising interest rates could put strain on mortgage borrowers.

In response, Yang said that the central bank makes its interest rate policy not only by taking into consideration the real estate market but also the effects on individuals and businesses.

June 19: Central bank to adopt flexible approach to 2% inflation target

As for concerns whether government-proposed salary increases for military personnel, civil servants, and public school teachers next year could lead to inflation, Yang said that compared with minimum wage increases, which will see some businesses raise prices to offset the wage hikes, raising salaries for military personnel, civil servants, and public school teachers will have only a small impact on consumer prices.

On the premise that the economy is growing steadily and the government's finances and taxes are sufficient, the government should adjust wages reasonably for military personnel, civil servants, and public school teachers to help them cope with soaring prices, Yang added.

Digital currency

In addition, Yang told the Legislature's Finance Committee that the central bank is working on developing a central bank digital currency (CBDC) and plans to work with the Ministry of Digital Affairs (MODA) to pilot a digital coupon system in relation to CBDC.

The MODA will assemble relevant government departments for the trial operation of the digital voucher system at the earliest by the end of this year, he added.

A CBDC is a form of digital currency issued by a country's central bank. It is similar to cryptocurrencies, except that its value is fixed by the central bank.

(By Pan Tzu-yu and Evelyn Kao)


View All
We value your privacy.
Focus Taiwan (CNA) uses tracking technologies to provide better reading experiences, but it also respects readers' privacy. Click here to find out more about Focus Taiwan's privacy policy. When you close this window, it means you agree with this policy.