Taiwan maintains discount rate at 1 3/8% as steady recovery pace seen

By Wendy Van Sickle

Columbus, Ohio, March 22 – The Central Bank of the Republic of China (Taiwan) decided unanimously to maintain the discount rate at 1 3/8% at its meeting on Thursday, according to a press release.

The bank’s board also decided to keep the rate on accommodations with collateral at 1¾% and the rate on accommodations without collateral at 3 5/8%.

The bank said that since its last meeting in late December advanced and emerging market economies have both been recovering at a steady pace, which may lead global economic growth to strengthen further in 2018.

Among major economies, growth in the U.S. economy is expected to accelerate and the euro area continues to exhibit robust growth, while Japan and China are likely to expand at a slower pace, the bank said.

Amid the continued global economic pickup, raw material prices may see an uptrend, and therefore inflation in major economies is expected to move up gradually.

In terms of domestic economic and financial conditions the bank noted that for the year to date, exports have risen moderately, while capital equipment imports have recorded a smaller decrease. Consumer confidence has been robust, and the domestic economy has continued its growth.

For the first two months of 2018, the average annual CPI growth rate was 1.54%, mainly driven by higher vegetable and cigarette prices. Core inflation, excluding vegetables, fruit and energy items, recorded an average annual growth rate of 1.61%, indicating a moderate price uptrend, the bank reported.

Meanwhile, the bank said it has continued to manage market liquidity through open market operations and bank reserves have stood at an appropriate level.

“In sum, both current inflationary pressures and future inflation expectations are mild, and Taiwan's real interest rate stands at an appropriate level among major economies,” the bank said in the release.

“In addition, global economic outlook still faces uncertainties, while the domestic growth momentum could soften modestly from the previous year and the actual output remains below potential.

“Based on the above assessment, the board judged that a policy rate hold will help safeguard price and financial stability and foster economic growth.”

© 2015 Prospect News.
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