Taiwan’s central bank raised its key policy rate for the third time in a row against the backdrop of inflationary pressures and intensified headwinds facing the global economy.
The central bank board unanimously decided to raise the benchmark discount rate by 0.125 percentage points to 1.625 percent, as expected.
The previous change in the rate was also a 0.125 percent hike in June.
The bank also lifted the reserve requirement ratio by 0.25 percentage points as part of the policy tightening.
The board decided to raise the rate on refinancing of secured loans, and the rate on temporary accommodations to 2.000 percent, and 3.875 percent, respectively.
The central bank made its decision after the U.S Federal Reserve raised interest rates to multi-year highs on Wednesday.
Considering domestic demand conditions, domestic private consumption has rebounded on the stabilized pandemic situation in the country, the Taiwanese central bank said.
However, export growth and private investment have been hindered by faltering final demand amid a slowing global economic expansion, the bank added.
The bank lowered its forecast for economic growth this year to 3.51 percent, which was lower than June’s 3.75 percent.
Due to softening international raw material prices and a higher comparison base, the bank expects that the domestic inflation rate will gradually come down, with CPI and core CPI growth rates of 2.95 and 2.52 percent, respectively, this year.
The central bank also projects the inflation and core inflation to drop to 1.88 percent and 1.87 percent, respectively, in 2023.
The bank said it may adjust its monetary policy accordingly in a timely manner as warranted, so as to fulfill the statutory duties of maintaining financial and price stability, and fostering economic development within the scope of the above objectives.
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