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Central bank expected to leave interest rates unchanged

Central bank expected to leave interest rates unchanged

Taipei, June 25 (CNA) The central bank is expected to leave its key interest rates unchanged in a quarterly policymaking meeting, as the local economy is showing signs of weakening, scholars said Thursday.
The central bank was scheduled to hold a quarterly policymaking meeting later in the day and the local financial market will be watching closely to see what conclusion the meeting reaches.
In the last meeting held in late March, the central bank decided to leave interest rates unchanged. It was the 15th consecutive quarter in which the central bank maintained the current low interest rates.
Liang Kuo-yuan, president of the Yuanta-Polaris Research Institute, said he expects the central bank to keep the rates low.
Liang said that Taiwan's exports have been impacted by weaker global demand, while private investment and consumption have also appeared slower than expected, so the central bank is likely to keep liquidity high by keeping interest rates intact.
Earlier in the week, Yuanta-Polaris lowered its forecast for Taiwan's 2015 GDP growth to 3.32 percent from the previous estimate of 3.66 percent, echoing a move by the government to cut its growth prediction to 3.28 percent from 3.78 percent in late May.
Taiwan is faced with little inflationary pressure, so the central bank is in no hurry to raise interest rates for the moment, Liang said. Yuanta-Polaris expects Taiwan's consumer price index (CPI) to rise only 0.1 percent in 2015.
Gordon Sun, director of the Macroeconomic Forecasting Center under the Taiwan Institute of Economic Research, said that Taiwan's core CPI, which excludes vegetables, fruit and energy, remained stable, so he also anticipated that the central bank will keep interest rates the same. In the first five months of this year, the local core CPI rose 0.94 percent from a year earlier.
Sun said that the local central bank tends to follow the U.S. Federal Reserve's footsteps in adjusting its monetary policy, but even if the Fed kicks off an interest rate hike cycle later in the year, Taiwan's central bank will leave its monetary policy unchanged by taking recent lower-than-expected economic data into account, in a bid to stimulate the local economy.
The central bank has maintained a discount rate of 1.875 percent, the rate of accommodations with collateral at 2.25 percent, and the rate of accommodations without collateral at 4.125 percent. (By Chen Cheng-wei and Frances Huang)


Updated : 2021-04-19 01:57 GMT+08:00