Taiwan CB Holds Key Rate; Lifts GDP Outlook

Taiwan’s central bank left its key interest rate unchanged as expected and lifted its growth outlook for this year citing strong exports of goods following the easing of the coronavirus containment measures by trading partners.

Policymakers decided to hold the benchmark rate at a record low 1.125 percent.

The Board of Governors of assessed that maintaining the policy interest rate unchanged and continuing loose monetary policy will help prices stability and financial stability, and support economic growth.

Driven by robust exports and recovery in retail sales, the economy is forecast to grow 1.6 percent this year, which was revised up from 1.5 percent estimated in June.

GDP growth is forecast to advance to 3.28 percent next year. The bank said manufacturers are likely to ramp up their production capacity after major trading partners stabilize.

The bank expects exports and private investment to grow further next year and private consumption to expand moderately.

Consumer prices are forecast to fall 0.2 percent this year before rising to 0.92 percent in 2021.

“Given the relatively strong performance of the economy, we doubt the central bank will be in any rush to cut rates any further,” Gareth Leather, an economist at Capital Economics, said.

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