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Taiwan's Central Bank announces key interest rate hike of 0.125 percentage points

Announcement coincides with US Federal Reserve decision to lift rates by 75 basis points, biggest rise since 1994

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Taiwan's Central Bank Governor Yang Chin-long. 

Taiwan's Central Bank Governor Yang Chin-long.  (CNA photo)

TAIPEI (Taiwan News) — Taiwan's Central Bank announced on Thursday (June 16) it will increase the country's key interest rate by 0.125 percentage points beginning Friday (June 17).

The decision from a quarterly board of directors meeting coincides with the U.S. Federal Reserve's move to raise its benchmark interest rate by 0.75 percentage points, the biggest rise in 28 years, in order to tame high inflation.

Additionally, the Board agreed to raise its discount rate to 1.5% from 1.375%, the rate on refinancing of secured loans to 1.875% from 1.75%, and the rate on temporary accommodations to 3.75% from 3.625%, according to the bank.

At Thursday's press conference, Central Bank Governor Yang Chin-long (楊金龍) said the hike is intended to mitigate the impact of soaring global commodity prices on Taiwan's small open economy, which depends on imports of crude oil and commodities from overseas.

"In the first five months of the year, the country's CPI (Consumer Price Index) increased 3.04%, which was driven by the soaring cost of crude oil and food imports rather than demand," the governor said. Yang also warned investors about the risks of cryptocurrency assets and said crypto trading regulations were being considered to stabilize financial markets.