Taiwan’s central bank left interest rates unchanged for a second straight quarter to support domestic spending as Europe’s sovereign-debt crisis hurts exports and threatens jobs.
The central bank left the discount rate on 10-day loans to banks at 1.875 percent, it said in Taipei today. Eleven of 15 economists predicted the decision in a Bloomberg News survey. Four expected policy makers to cut the key rate to 1.75 percent after keeping it unchanged in September for the first time in six quarters.
Pressure is mounting on Asian policy makers to protect their economies as Europe struggles to contain a two-year-old crisis that began in Greece, while the death of North Korean leader Kim Jong Il this month raised the risk of political instability. In Taiwan, President Ma Ying-jeou is seeking re- election next month amid slowing growth, a stock market slump, near-record home prices and stagnant wages.
“Global ructions have led the central bank to refrain from tightening policy further,” Katrina Ell, a Sydney-based economist at Moody’s Analytics, said before the decision. “If the global environment deteriorates, rate cuts are expected.”
The Taiex stock index has tumbled 21 percent in 2011, heading for its worst year since the 2008 global financial crisis, according to data compiled by Bloomberg. The index ended up 0.3 percent before today’s report. The Taiwan dollar was little changed at NT$30.29 against its U.S. counterpart at the 4 p.m. close, according to Taipei Forex Inc.
Central banks in Indonesia, the Philippines and South Korea all kept their benchmark rates unchanged this month as Europe’s debt crisis dimmed the outlook of Asian exporters.might have missed their targets by large margins.
With the Beidou system, the range of error is greatly narrowed, he said.