Interest Rate in Taiwan
Taiwan - Interest Rate
Central Bank stands pat again in June, leaves outlook broadly unchanged
Taiwan’s Central Bank of the Republic of China (CBRC) stood pat for the 12th consecutive quarter at its 20 June monetary policy meeting. The Board of Directors of the CBRC unanimously decided to leave the discount rate unchanged at 1.375%, as had been expected by analysts.
The decision came against a backdrop of slowing global growth, heightened trade uncertainty due to the U.S.-China trade war, and mild domestic momentum amid weak demand for Taiwan’s flagship tech exports. Nevertheless, the Central Bank expects economic growth to pick up somewhat in the second half of the year. Notably, the Bank expects exports to gain steam thanks to a low-base effect and diverted orders from companies trying to avoid tariffs on Chinese products. Moreover, the recent dovish shift from the U.S. Federal Reserve should provide some support by helping ease domestic financial conditions, while fiscal stimulus will further shore up domestic demand.
In this context, the CBRC left its growth and inflation projections broadly stable, with GDP growth seen clocking at 2.06% this year, down from 2.13% in March. The inflation projections were also revised downward only marginally, with headline inflation now seen at 0.87% in 2019 (from 0.91% in the March forecasts) and core inflation at 0.76% (down from 0.78% in March).
Looking ahead, most of our panelists expect the Bank to stand pat throughout this year and to not raise rates until 2021. The consensus view is summed up by Iris Pang, greater China economist at ING, who noted that “unless the economy falls into recession—which we don’t expect—we doubt the central bank will cut interest rates in 2019.” Moreover, she added that “Taiwan will hold a presidential election in January 2020, and the economy could benefit as a result. This is because the current government is likely to be more supportive to the economy to try to earn votes and keep [incumbent President] Tsai Ing-Wen in power.”
FocusEconomics Consensus Forecast panelists see the discount rate at 1.38% by the end of 2019. The panel sees the interest rate ending 2020 at 1.39%.
Taiwan - Interest Rate Data
|Policy Interest Rate (%)||1.88||1.88||1.63||1.38||1.38|
5 years of economic forecasts for more than 30 economic indicators.
Taiwan Interest Rate Chart
Source: Central Bank of China.
|Bond Yield||0.69||1.28 %||Jul 31|
|Exchange Rate||31.17||0.07 %||Jul 31|
|Stock Market||10,824||0.37 %||Jul 31|
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August 7, 2019
Merchandise exports decreased 0.5% in July compared to the same month a year earlier, contrasting the 0.5% increase in June.
August 6, 2019
Consumer prices fell 0.10% in July from the previous month, which contrasted June’s 0.33% increase.
August 1, 2019
The manufacturing Purchasing Managers’ Index (PMI), reported by Nikkei and IHS Markit, rose to 48.1 in July from 45.5 in June, but remained below the 50-point threshold that separates expansion from contraction.
July 31, 2019
The economy expanded 2.4% year-on-year in the second quarter according to an advance GDP estimate, up from Q1’s 1.7% and easily beating market analysts’ expectations of a 1.8% expansion.
July 23, 2019
Industrial output fell 0.4% year-on-year in June, up from the revised 2.6% year-on-year decrease logged in May (previously reported: -3.1% year-on-year). Output in the manufacturing sector—which represents more than 90% of total industrial production—fell 0.6% in June, up from a 2.5% fall in May.