At its quarterly board meeting, the central bank left the discount rate and rates on accommodations with and without collateral at 1.875 percent, 2.25 percent and 4.125 percent, respectively. The rates have remained at current levels since July 2011.
Central Bank Gov. Perng Fai-nan said the decision to adopt a “moderate easing policy” will help maintain Taiwan’s price levels and financial stability.
“Despite uncertainties such as the U.S. fiscal cliff and European sovereign debt crisis, the global economy is set for mild growth in 2013 as markets in emerging economies and mainland China gradually get back on track.”
Citing forecasts by several global think tanks, Perng said oil prices should trend down next year, easing inflationary pressure worldwide. “Similarly, slightly higher food prices for 2012 will help cap Taiwan’s consumer price increases in 2013,” he added.
Against this backdrop, Perng said he expects Taiwan’s exports and private investment to begin picking up steam, while domestic consumption will remain steady.
The central banker’s predictions are backed by a number of global institutions such as the World Bank, which in a survey released Dec. 19 tipped Taiwan’s gross domestic product to grow 4 percent next year.
On local market liquidity, Perng said he expects it to remain in check as bank loans and money supply averaged annual growth of 5.03 percent and 4.22 percent, respectively, for the first nine months, enough to support Taiwan’s expanding economy.
The central banker also downplayed concerns that easing monetary policies recently adopted by major countries such as Japan and the U.S. would place appreciation pressure on the New Taiwan dollar. “Taiwan is bound to be affected given its small market size, but the central bank will make every effort to weather such impact,” he said.
Perng revealed that the central bank is mulling the establishment of a foreign exchange settlement platform by the middle of next year. This step, which he described as “essential financial infrastructure,” is aimed at enhancing the financial sector’s global competitiveness by cutting costs, increasing efficiency and creating more business opportunities. (JSM)
Write to Meg Chang at sfchang@mofa.gov.tw