As expected, central bank leaves interest rates unchanged

Taipei, June 18 (CNA) The local central bank on Thursday decided to leave its key interest rates unchanged after wrapping up a quarterly policymaking meeting, marking the ninth consecutive quarter the bank has maintained interest rates at the same level.

The decision was widely anticipated by the market, particularly after the U.S. Federal Reserve left interest rates unchanged overnight, although the Fed struck a hawkish tone, hinting at a possible rate hike later this year.

Following the decision, Taiwan's discount rate will stay at 2 percent, still the highest level in 15 years, with the rate on accommodations with collateral at 2.375 percent and the rate on accommodations without collateral at 4.250 percent.

Market analysts said it was not urgent for the central bank to raise interest rates for the moment as Taiwan's inflation remains subject to government price stabilization measures employed to address growing crude prices amid geopolitical tensions in the Middle East.

Despite May consumer price index (CPI) growth hitting 2.20 percent due to a spike in energy prices, CPI growth averaged 1.52 percent during the January-May period, still below the 2 percent alert level set by the central bank.

Analysts said with a peace agreement between the United States and Iran to be signed soon, crude prices have shown signs of coming down, which could help to ease inflationary pressure and allow the central bank to take a breather.

According to analysts, the local central bank appeared cautious and is unlikely to adjust monetary policy before its counterparts, in particular the Fed, adding that it needs more time to observe the situation.