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Possible Fed QE3 to cause higher inflation in Taiwan: scholar

Possible Fed QE3 to cause higher inflation in Taiwan: scholar

Taipei, Aug. 28 (CNA) Taiwan will face higher inflation if the U.S. Federal Reserve comes up with a third round of quantitative easing (QE3), a local scholar said Tuesday. The highly possible QE3 could serve as an adverse factor in Taiwan's inflation, Gordon Sun, director of the Macroeconomic Forecasting Center of the Taiwan Institute of Economic Research, said at press briefing. Quantitative easing is a monetary policy used by central banks to stimulate their national economies. With increases in local food prices, especially vegetables and fruit, as a result of recent typhoons and heavy rain, Taiwan is facing high pressure to keep its annual inflation growth below 2 percent, said Sun. Given the fact that the effect of the last two rounds of U.S. quantitative easing did not really give the U.S. economy a long-term boost but instead drove up international oil and food prices, Sun said the QE3 will not be very different. Although Taiwan might see an upward stock market trend for a short while, it will also experience inflation caused by the U.S. quantitative easing, according to Sun. Earlier this month, the government forecast a 1.93 percent rise in Taiwan's consumer price index for 2012, revising its projection of a 1.9 percent increase made in late July. (By James Lee)


Updated : 2021-03-08 06:18 GMT+08:00