Taiwan won’t follow U.S. rate policy: governor

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INFLATION:
While ruling out aggressive rate hikes like in the US, the central bank said it would monitor global movements in energy and commodity prices

  • By Crystal Hsu / Staff Reporter

Taiwan will not follow the United States in setting its monetary policy, but it will pay attention to movements of its global peers, international commodity price trends and geopolitical risks, central bank governor Yang said. Chin-long (楊金龍) at a meeting of the Legislative Assembly Finance Committee. yesterday.

“There is no need for Taiwan to follow U.S. monetary decisions” as the U.S. Federal Reserve is widely believed to raise interest rates by 50 basis points next month in another of six other rate hikes planned this year to curb inflation, Yang said.

US inflation hit 8.5% last month, while Taiwan’s rose 3.27%, making drastic rate hikes unwarranted, he said.

Photo: ANC

Instead, the central bank will approach the issue taking into account political shifts in its global peers, inflationary pressures at home and international movements in fuel and commodity prices, he said.

Besides, the central bank will seek to support the national economy to fulfill its duty, he said.

Yang said he stood by the idea that Taiwan could achieve 4% GDP growth this year, although international research bodies cut their forecasts to an average of 3.8% after Russia invaded the country. Ukraine in February and crude prices have since skyrocketed.

Consumer prices in Taiwan are expected to decline in the next quarter, although the landscape is full of uncertainties, Yang said.

The central bank will make its quarterly decisions based on the latest global and domestic economic data, Yang said, while acknowledging that the continued weakening of the New Taiwan dollar against the greenback is boosting inflation.

Consumer prices rose 0.1 to 0.17 percentage points after the NT dollar recently fell from NT$28 to NT$29 against the U.S. currency, Yang said, describing the additional inflationary burden as moderate.

A weak NT dollar won’t necessarily become the norm, but has a lot to do with global funds’ response to Fed rate hikes and asset adjustments, he said.

“The market will have the final say on the movements of the NT dollar, but it remains the best performer of the past two years, thanks to the strength of the Taiwanese economy and the profitability of companies,” Yang said.

The governor reiterated that the March 17 rate hike was not intended to cool the housing market, although it inevitably sent negative messages.

The central bank would favor selective credit controls to prevent funds from spilling over into the property market, he said.

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