By www.CentralBankNews.info Taiwan’s central bank held its benchmark interest rate steady at 1.875 percent, as expected, saying the current stance was appropriate as the country’s economy was “experiencing a mild recovery along with muted inflationary pressures.”
The Central Bank of the Republic of China (Taiwan), which has held its discount rate unchanged since June 2011, said economic activity had picked up since the fourth quarter due to better-than-expected exports and private consumption.
The government’s budget, accounting and statistics directorate has revised upwards its forecast for first quarter Gross Domestic Product growth to 3.26 percent and “bolstered by the world’s moderate economic expansion, exports and private investment will likely drive the domestic economy to grow by 3.92% in the second quarter and 3.59% for the entire year,” the central bank said.
In December, the bank said it forecast 2013 GDP growth of 3.15 percent.
For the first two months of this year, consumer price inflation averaged 2.05 percent but core inflation only grew by 1.25 percent, the bank said.

It added the government projects 1.99 percent inflation for the first quarter, then 1.40 percent in the second quarter due to recent falls in international commodity prices and base effects of last year’s fuel and electricity price hikes. For the full year, inflation is forecast at 1.37 percent.
The central bank has tightened controls on mortgages and land financing to keep property prices from rising too fast and it said that it was keeping a close watch on real estate lending and urged financial institutions to ensure sound operations and thus preserve financial stability.

Wednesday, December 19, 2012

Taiwan holds rate steady, sees improved 2013 outlook

Taiwan’s central bank held its benchmark interest rates unchanged, as expected, saying the current policy rate was conducive to maintaining price stability and promoting economic growth in light of a modest economic recovery, subdued inflationary pressures and global economic uncertainties.
But the Central Bank of the Republic of China, which has held its discount rate steady at 1.875 percent since June last year, struck an optimistic tone about next year, saying the domestic economy was forecast to expand by 3.15 percent in 2013 as exports and private investments are likely to revive on the back of a gradual economic recovery while consumption remains steady.
“Recent developments point to signs of stabilization for the global economy, with an improved outlook for 2013,” the bank said after a meeting of its board.
The central bank said the Taiwan dollar’s exchange rate was in principle determined by the market but when there is “excess volatility and disorderly movements” with adverse implications for economic and financial stability, “the CBC will step in to maintain an orderly market.”

Earlier this month the central bank intervened in the foreign exchange market to ease the upward pressure of the TWD, which has appreciated some 4.5 percent against the U.S. dollar this year.
It said the euro zone recession has eased, the U.S. economy looks set for moderate expansion, China has regained growth momentum and Asian emerging economies also see a rebound in prospect. However, the bank added there were still risks from the U.S. fiscal cliff and Europe’s debt crises.
The central bank’s board set a M2 growth target of 2.5-6.5 percent for 2013.
Taiwan’s economy picked up speed in the third quarter, expanding by 0.98 percent from the second for annual growth of 1.13 percent, reversing a 0.18 percent contraction in the second.
The central bank said the economy was estimated to have expanded by 2.97 percent in the fourth quarter from the third.
Inflation, which fell to 1.59 percent in November from October’s 2.36 percent, was estimated at 1.93 percent for 2012 and is forecast to fall to an annual rate of 1.27 percent next year due to expected steady international commodities and lower base effect for fruit and vegetables, the bank said.
The central bank’s market operations have been aimed at managing liquidity, it said, adding that banks’ excess reserves were steady at $21.6 billion and for the first 11 months of the year loans and investments by banks grew by an annual rate of 5.03 percent and the M2 annual growth rate averaged 4.22 percent, sufficient to meet the economy’s needs and support growth.

STORMY WATERS:Analysts expect the central bank to leave interest rates alone, and urged caution as risks from abroad could derail Taiwan’s nascent economic revival

By Crystal Hsu / Staff reporter

The central bank may maintains it policy of keeping interest rates on hold at its quarterly board meeting on Thursday as significant downside risks remain even though the outlook for economic growth has improved, HSBC PLC said in a report.

“We expect the central bank to stay put until the year end, rather than rush into a sharp and unnecessary policy shift,” HSBC Greater China economist Donna Kwok (郭浩庄) said in the report.

The central bank has left the discount rate unchanged at 1.875 percent since September 2011, although it has tightened credit controls on mortgage and land financing to attempt to rein in property price hikes.

Other foreign banks, including Standard Chartered Bank, Barclays PLC and Australia and New Zealand Banking Group Ltd (ANZ), also forecast the central bank would leave its key interest rates unchanged at the meeting, but would keep a close watch on the property market.

Last week, central bank Governor Perng Fai-nan (彭淮南) told lawmakers the bank had no plans to withdraw its credit-tightening measures anytime soon. He did not say whether the bank would take further steps to curb rising house prices, despite prices in major metropolitan areas remaining high.

Kwok said the central bank was concerned about property prices, but was considering use of administrative measures, rather than interest rate increases, to send a message to the real-estate market.

While the central bank is likely to keep liquidity ample in an effort to provide a boost to the economy, as inflationary pressures are unlikely to emerge in the near future, HSBC said it does not expect the nation’s economic growth to recover significantly for at least another year, with external growth risks still a major factor.

“It is no time for Taiwan to rest easy just yet, as the impact of sequestration has yet to filter through, and a US government shutdown is not totally inconceivable,” Kwok said.

European economies, except Germany, have yet to show signs of serious revival and the proposed Cyprus bailout threatens to put the sovereign debt crisis back on center stage, she said, adding that external uncertainties warrant caution for any policy moves that may lead to upside price pressures.

The latest government statistics showed the consumer price index rose 2.97 percent year-on-year last month, after an increase of 1.13 percent in January, on the back of Lunar New Year demand.

The government has estimated the consumer price index will increase 1.37 percent this year, down from last year’s 1.93 percent.

aipei, March 16 (CNA) Taiwan’s central bank said Friday that it expects inflationary pressure in Taiwan will ease this year partly due to stabilizing grain and energy prices in the global market.

In addition, as growth in local vegetable and fruit prices is likely to slow due to a high comparison base recorded in 2012, and domestic communications fees are trending lower, the upward pressure in consumer prices is expected to be mitigated in 2013, the central bank said.

The comments echoed a forecast made by the Directorate General of Budget, Accounting and Statistics (DGBAS) in February which said the local consumer price index (CPI) for 2013 is expected to grow 1.37 percent, down from an increase of 1.93 percent recorded in 2012.

In addition to the slower growth in the local CPI forecast by the central bank and the DGBAS, the Taiwan Institute of Economic Research and the Chunghua Institute for Economic Research, two of the major think tanks in Taiwan, expect local consumer prices will rise 1.53 percent and 1.57 percent, respectively.

Global Insight, a worldwide economic institute, has also anticipated Taiwan’s inflation will ease to 1.5 percent in 2013, while it has forecast that global inflation will fall to 3 percent this year from 3.2 percent recorded in 2012.

As the central bank’s concerns over inflation has been reduced, market analysts said, the bank will likely leave its key interest rate unchanged in the upcoming policymaking meeting scheduled for March 28, in a bid to keep liquidity ample to boost the economy.

Several foreign banking groups, including Barclays, Standard Chartered Bank, and Australia and New Zealand Banking Group Ltd., have forecast the central bank will leave the interest rates intact in the meeting.

In the previous policymaking meeting held Dec. 19, the central bank maintained its key discount rate at 1.875 percent, the rate of accommodations with collateral at 2.25 percent and the rate of accommodations without collateral at 4.125 percent.

Meanwhile, the central bank said it will keep a close eye on the movement of the Japanese yen, which has fallen sharply as the Bank of Japan continues to ease liquidity to depress the currency.

The weakness of the yen has triggered a currency depreciation competition in the region with the central banks in Taiwan and South Korea stepping in to allow their currencies to fall in an attempt to protect their country’s global competitive edge, analysts said.

The local central bank said the Taiwan dollar appears relatively stable compared with the South Korean won, but it emphasized that it is determined to closely monitor the foreign exchange market and

aipei, March 13 (CNA) Several foreign banks predicted Wednesday that the local central bank will leave key interest rates unchanged in a policymaking meeting scheduled for March 28 as local inflation remains mild.

Among the foreign banks, British banking group Barclays Plc said it expects the central bank to keep liquidity ample in an effort to further lift the economy, although local economic fundamentals have shown some signs of recovery.

In February, the government raised its forecast for the country’s economic growth for 2013 to 3.59 percent from a previous estimate of 3.53 percent, citing an increase in exports and private consumption. In 2012, the local economy grew by just 1.26 percent from the previous year.

The government also anticipates that the local consumer price index for 2013 will rise 1.37 percent from a year earlier, down from an annual increase of 1.93 percent in 2012.

Barclays said the forecast of a 1.37 percent increase in local consumer prices means local inflation will be in check so that the central bank is likely to leave the discount rate unchanged at 1.875 percent in the upcoming policymaking meeting.

The British bank also raised its forecast for Taiwan’s annual gross domestic product (GDP) growth to 4.0 percent from a previous prediction of 3.4 percent.

Raymond Yeung, a senior economist with Australia and New Zealand Banking Group Ltd. (ANZ), agreed that Taiwan will have contained inflation and that the central bank is likely to keep its key interest rates unchanged in the first quarter.

For its part, Standard Chartered Bank, another British financial institution, said the central bank has no urgent need to tighten its monetary policy in the first quarter, adding that it is unlikely to raise key interest rates before the middle of the year at the earliest.

Earlier this month, Standard Chartered maintained its forecast of Taiwan’s GDP growth at 3.9 percent.

The foreign banks also said the central bank could address the issue of rising real estate prices at the March 28 meeting and come up with further measures to rein in property prices.

In the previous policymaking meeting held Dec. 19, the central bank maintained its key discount rate at 1.875 percent, the rate of accommodations with collateral at 2.250 percent and the rate of accommodations without collateral at 4.125 percent.

If the central bank does not alter the key interest rates in March, it will be the seventh consecutive quarter in which they have rem

Taiwan Will Appoint Central Bank Governor Perng to Another Term

By Andrea Wong & Chinmei Sung – Feb 1, 2013 4:36 AM MT

Taiwan will appoint central bank governor Perng Fai-Nan for a fourth five-year term, suggesting a continuation of currency-stabilizing policies at a time when closer trade and investment ties with China are being built.

Perng, 74, will stay on as governor of the Central Bank of the Republic of China (Taiwan) beyond the Feb. 25 deadline, when his term is scheduled to end, Fan-Chiang Tai-chi, a spokesman of the presidential office said today.

The re-appointment comes as President Ma Ying-jeou acts to strengthen an economy that grew in 2012 at the slowest pace since the 2009 global recession. Perng, who enjoys bipartisan support, has led the island’s monetary authority since Feb. 1998 after his predecessor died in an airplane crash.

“He has an incredible record of pre-empting crisis and reassuring the markets,” Wai Ho Leong, a Singapore-based economist at Barclays Plc, said before the announcement. “He’s had a very good record of managing inflation and using monetary policy to that effect. He’s done an excellent job of managing the growth-inflation trade-off and has maintained systemic stability. He’s also very well-regarded internationally.”

The re-appointment may help allay concerns about the island’s currency. Policy makers warned on Jan. 29 they would step into the foreign-exchange market after the Taiwan dollar reached a four-year high against the yen on Jan. 28, hurting exporters. Taiwan Semiconductor Manufacturing Co. chairman Morris Chang said at a forum Jan. 11 that the government should let the Taiwan dollar depreciate further to aid competitiveness.

Growth Recovery

Perng has held interest rates steady for six straight meetings since June 2011 as the export-dependent economy struggled with weakening demand for its electronic goods. Gross domestic product rose 3.42 percent in the fourth quarter from a year earlier, compared with a 0.98 percent pace in the previous three-month period, a report showed on Jan. 31.

Perng, who holds a Ph.D. in law from the University of Minnesota, told lawmakers in December the governor’s position “will be my last public job.” He is the longest-serving central bank governor in Asia among economies tracked by Bloomberg. Malaysia’s Zeti Akhtar Aziz, who took charge in May 2000, comes next.

Perng and Zeti, alongside Amando Tetangco of the Philippines, Glenn Stevens of Australia andIsrael’s Stanley Fischer, received an ‘A’ grade in Global Finance magazine’s annual ranking of the world’s central bankers last year. They were rated higher than Federal Reserve Chairman Ben Bernanke and the European Central Bank’s Mario Draghi.

Central bank unlikely to change key interest rates in 2013: Barclays
2012/12/21 18:15:17

Taipei, Dec. 21 (CNA) Taiwan’s central bank is likely to leave key interest rates unchanged throughout 2013 because it wants to keep domestic markets liquid and push the local economy on the road to recovery, British bank Barclays Plc said Friday.

Growth remains the focus of policymaking, Barclays said in a market comment, though the central bank’s concerns seemed to have eased “slightly” amid improving economic prospects.

With signs of stabilization in China, the U.S. and the eurozone, the central bank has turned less pessimistic over the outlook for the world economy, it said.

Barclays predicted that Taiwan will see improving exports, consumption and private investment in 2013, and inflation should be “more benign” at around 1.2 percent, compared with 1.93 this year, as prices of international raw materials stabilize.

At a quarterly policymaking meeting Dec. 19, Taiwan’s central bank maintained its discount rate at 1.875 percent, its secured loan rate at 2.25 percent and its unsecured loan rate at 4.125 percent.

It was the sixth consecutive quarter that the central bank left key interest rates unchanged, hoping that sustained low interest rates will pull the domestic economy out of its doldrums.