No immediate plan to cut interest rates: Taiwan central bank head
Oct 04, 2019MarketComments Off on No immediate plan to cut interest rates: Taiwan central bank head
Taipei-Taiwan's central bank has no immediate plan to lower key interest rates even as other countries loosen monetary policy and boost liquidity to counter the effects of global trade friction, according to Central Bank Governor Yang Chin-long (???).
At a hearing of the Legislative Yuan's Finance Committee held Thursday, Yang said lowering rates was not necessary for the time being based on recent data for Taiwan's economy.
His comment indicated that the bank is likely to leave interest rates unchanged at a quarterly policymaking meeting in December, despite a rate cut by the U.S. Federal Reserve in July and more cuts expected later this month and in December.
At the Taiwan central bank's last policymaking meeting on Sept. 19, it kept key interest rates the same for the 13th consecutive quarter.
The discount rate stayed at 1.375 percent, rates on accommodations with collateral were kept at 1.750 percent, and accommodations without collateral remained unchanged at 3.625 percent.
In September, the central bank raised its forecast for Taiwan's gross domestic product (GDP) for 2019 to 2.40 percent, up 0.34 percentage points from an earlier estimate made in June.
It also forecast 2.34 percent growth in 2020.
While the trade dispute between the United States and China will continue to create global economic uncertainty, it will also lead more American buyers to order goods directly from Taiwan to avoid tariffs on Chinese-made products, Yang said.
That increase in orders, which is already benefiting Taiwan's economy, is expected to continue into 2020, he said.
Though other countries have launched rate cut cycles, Taiwan's central bank is also currently looking to see if measures other than a change in monetary policy are available to prevent an economic slowdown, Yang said.
Commenting on the Fed's rate cut in July and expected cut in October, Yang described the moves as a preemptive measure and said it remained to be seen whether the rate cuts will continue next year.
Much will depend, he said, on how the U.S. economy evolves as the trade war with China continues.
Despite the current uncertainty from the trade war, Yang said he did not expect the global economy to see a financial crisis anytime soon, but he did not elaborate.