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Taiwan not necessarily following U.S. on monetary policy: Perng

Taiwan not necessarily following U.S. on monetary policy: Perng

Taipei, Sept. 24 (CNA) Perng Fai-nan (???), governor of Taiwan's Central Bank, said Thursday that the bank's decision to cut its key interest rates represented a shift from a relatively accommodative monetary policy to an easy money policy, and does not necessarily follow the United States. Amid speculations that the U.S. might raise interest rates toward the end of the year, Taiwan's decision to cut its key interest rates by 0.125 percentage points has surprised some market observers, who were wondering whether Taiwan would follow the U.S. and raise its rates. But Perng said the Taiwan Central Bank's monetary policy is informed mainly by commodity prices and economic performance, and does not necessarily follow the U.S.' The decision to lower interest rates was based on sluggish exports over the past months and an expectation that inflation will remain low over the next year, he said. It was a move from a relatively accommodative monetary policy to an easy money policy, he said. Perng said foreign exchange rates have been fluctuating since early this year due to heavy buying by foreign investors on Taiwan's stock market. When large amounts of U.S. dollars are flowing into Taiwan, a surge in the exchange rate of the New Taiwan dollar can be expected, he said, pointing out that the local currency jumped from NT$32 against the U.S. dollar in January to NT$30.5 on May 22. As to the effects of a lower interest rate on the economy, Perng said it will become obvious only after 12-18 months. Meanwhile, the interest rate cut was welcomed by the business sector, with Lawrence Chang (???), honorary chairman of the General Chamber of Commerce, and Lin Hui-ying (???), chairwoman of the National Association of Small and Medium Enterprises, saying it would stimulate the economy. Minister of Economic Affairs John Deng (???) expressed a similar view, saying that lower interest rates will help boost Taiwan's exports and encourage investment. The Central Bank announced Thursday a decision to lower its key interest rates by 0.125 percentage points, the first cut in 16 quarters. (By Y.S. Tsai, C.W. Huang and Lillian Lin)


Updated : 2021-03-01 00:46 GMT+08:00