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Taiwan softens impact of latest round of interest rate hikes

The government will foot the higher interest rate bill for special loan programs

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Taiwan's government is taking measures to soften the impact of Thursday's interest rate hikes. 

Taiwan's government is taking measures to soften the impact of Thursday's interest rate hikes.  (CNA photo)

TAIPEI (Taiwan News) — After the Central Bank announced modest interest rate hikes on Thursday (June 16), the government said it was taking measures to soften the impact on the public.

The key interest rate rose by a moderate 0.125 percentage points, while the lenders' required reserve rate went up by 0.25 percentage points in moves designed to curb inflation without harming the economy as a whole.

However, as the measures make the repayment of loans more difficult, the Cabinet said it was taking action to prevent the rate changes from excessively burdening the public where possible.

The government will pay for any increase caused by rate hikes on the interest to be paid on loans launched by the Ministry of Labor (MOL) to help workers during the COVID-19 pandemic, NowNews reported. A total of 1.59 million loans were issued under the program.

Similar measures will also cover beneficiaries of student loans, loans for startups and young entrepreneurs, and loans helping young families to buy their first home, leaving those groups outside the reach of Thursday’s Central Bank decision, according to the report.