Taiwan central bank governor says interest rate cut unlikely

Taipei, March 13 (CNA) Taiwan's central bank is unlikely to lower interest rates at its quarterly policymaking meeting next week, the bank's governor Yang Chin-long (楊金龍) said Thursday.

"The chance that rates will be cut is low," Yang told lawmakers during a meeting of the Legislative Yuan's Finance Committee.

"The central bank will maintain its past practice of considering a rate cut if the consumer price index [CPI, an inflation measure] dips below 1.5 percent," Yang said.

Yang made the remarks ahead of the central bank's policymaking meeting on March 20, and one day after submitting to the committee a written report on the country's economic situation.

In the written report, the bank assessed that Taiwan's economic growth momentum remains strong, but said higher Taiwan Railway Corp. train fares and electricity rate hikes could push annual inflation up slightly to above 2 percent.

During the legislative meeting, Yang also told lawmakers he's "not worried" about Taiwan being labeled as a currency manipulator in the U.S. Treasury Department's twice-yearly report on the currency practices and macroeconomic policies of its major trading partners.

According to Yang, the criteria for currency manipulation in the report include a trade surplus with the U.S. of at least US$15 billion, a currency account surplus of at least 3 percent of GDP, and persistent foreign exchange market interventions for at least eight months with net purchases of at least 2 percent of GDP.

Taiwan often meets the first two of these criteria because of the nature of its economy, and it is thus possible that Taiwan will continue to be on the report's watchlist, Yang said.

"But the Central Bank has good lines of communication with the U.S. Treasury Department," Yang said, suggesting there was little risk that it would be named a currency manipulator.

Meanwhile, Yang also brushed off the possibility that Taiwan could be harmed by U.S. President Donald Trump's threats to impose a round of reciprocal tariffs, meaning to tax imported goods at the same level that other countries tax U.S. exports.

According to World Bank data, Taiwan has a lower weighted average of tariffs on imported goods from the United States than vice versa, Yang said, adding that the imposition of reciprocal tariffs would therefore have little effect.