Taiwan: Central Bank stays put in September
September 25, 2014
At its 25 September monetary policy meeting, the Central Bank of the Republic of China (Taiwan) left the discount rate unchanged at 1.875%, where it has been for the last three years. The Bank’s decision was on par with market expectations.
The Central Bank pointed out that while global economic activity has begun to recover, the rate of recovery has been unequal across major economies. Further, uncertainties in the future of the global economy linger as the Fed’s asset purchase program winds down. Nevertheless, the Central Bank commented that, “the moderate expansion of the global economy is expected to boost Taiwan’s exports.” Domestically, the Central Bank stated that private consumption growth may be moderated as food safety concerns weigh on consumer confidence. Additionally, growth in private investment may decelerate.
Regarding price developments, the Central Bank recognized that inflation has risen since the beginning of this year, mainly due to, “supply-side factors such as infected piglets.” Nonetheless, the Bank sees the inflation outlook for this year remaining stable.
The Bank concluded that authorities continued to manage market liquidity through open market operations in order to maintain banks’ excessive reserves “at an appropriate level” and that, “a rate hold will help maintain price and financial stability and foster economic growth.”