The ROC central bank left Taiwan’s key interest rates unchanged June 27 as part of efforts to maintain macroeconomic stability and keep consumer prices steady amid uncertainties abroad.
At its quarterly board meeting, the central bank kept the discount rate at 1.875 percent and the collateralized and unsecured loan rates at 2.25 percent and 4.125 percent, respectively. The rates have remained unadjusted since July 2011.
Central bank Gov. Perng Fai-nan said the decision to continue a “moderate easing policy” is appropriate in light of developments overseas.
“The pace of recovery in major economies has been inconsistent, with Japan and the U.S. on a steady growth track, while the eurozone continues to struggle,” Perng said.
Expected phase-out of the U.S. Federal Reserve’s quantitative easing policies, liquidity problems in mainland China’s banking system and sizeable short-term global capital flows are causing fluctuations in financial markets worldwide, he added.
On the domestic front, Perng said lower-than-expected exports stemming from weak global demand and lackluster private consumption led to disappointing growth of 1.67 percent for the first quarter.
Consumer prices increased 1.45 percent as of the end of May, but are expected to come down to 1.14 percent during the second half on the back of stabilizing global commodity prices and a higher comparison base from last year.
Perng said guiding the country’s real estate sector toward a healthier development track continues to be a central bank policy priority.
“Most banks in areas with high housing prices have demonstrated self-discipline and implemented appropriate control measures,” he said. These include no grace periods for individuals with more than one mortgage, lowering loan-to-value ratios and raising interest rates.
Concerning calls by some exporters for a weaker New Taiwan dollar to boost business, Perng said the local currency has depreciated 0.77 percent against the U.S. dollar in the past year, while the South Korean won appreciated 0.57 percent over the same period.
“The central bank conducts regular discussions with the private sector to better understand its operations and future outlook. But the ultimate goal of the country’ exchange rate policies is to promote macroeconomic stability rather than accommodate the needs of specific industries.”
While exchange rates are determined by currency supply and demand, “We will take all necessary measures in accordance with the Central Bank of the ROC Act when irregularities arise that cause anomalies in the financial market,” he said.
Regarding the cross-strait currency swap agreement, Perng said officials in Taipei and Beijing are all stepping up efforts to advance the pact, with mainland China’s leader Xi Jinping and central bank Gov. Zhou Xiaochuan responding positively to the issue earlier this month. (JSM)
Write to Meg Chang at sfchang@mofa.gov.tw