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Central bank might leave interest rates unchanged

Central bank might leave interest rates unchanged

Taipei, Sept. 24 (CNA) The Central Bank of the Republic of China is likely to leave its key interest rates unchanged after concluding a quarterly policymaking meeting Thursday afternoon, market analysts said that day. In a session held by the Finance Committee of the Legislative Yuan the previous day, Central Bank Governor Perng Fai-nan (???) told lawmakers that Taiwan's interest rates are low enough and the market is awash in ample liquidity, adding that a looser monetary policy will not serve as a key factor to boost the local economy. Analysts said that Perng's comments indicated the possibility that the central bank will keep interest rates intact after Thursday's meeting, even though the local economy has been hit by falling exports amid weak global demand. The central bank kept its key interest rates unchanged for the 16th consecutive quarter after a quarterly policymaking meeting was concluded in late June. So far, 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. It has been the longest period the bank has left interest rates unchanged. The analysts said that even if the central bank decides to cut interest rates Thursday, the reduction is expected to be small, and simply a symbolic gesture, rather than having any real effect on the local economy. In August, the government cut its forecast of Taiwan's gross domestic product growth for 2015 to 1.56 percent, down from an earlier estimate of a 3.28 percent rise, citing weaker-than-expected exports. Many economists have raised concerns that Taiwan could struggle to maintain a 1 percent increase in GDP for this year if exports continue to deteriorate. Exports dropped 14.8 percent in August, marking the seventh consecutive month of decline. While likely to leave interest rates unchanged, the analysts said, the central bank could continue to keep the Taiwan dollar cheaper in a bid to make Taiwan-made goods more competitive in the global market and protect Taiwanese exports. On the back of the central bank's intervention, the Taiwan dollar fell to a six-and-a-half year low of NT$33.250 against the U.S. dollar Wednesday. Talking to lawmakers, Perng reiterated the stance that the central bank will allow a market mechanism to decide the Taiwan dollar's value but will try hard to maintain market order if the market is interrupted by unforeseen factors. (By Tasi Yi-chu and Frances Huang)


Updated : 2020-12-05 20:25 GMT+08:00