Taiwan's central bank freezes discount rate at 1.875%

No mention of rate hikes resumption.

As widely expected, Taiwan's central bank (CBC) froze the benchmark discount rate at 1.875% yesterday.

According to a research note from DBS, no message about a resumption of rate hikes was sent at this meeting.

During the policy statement, the central bank has commented that global economic outlook remains uncertain, domestic output gap is negative and inflation is moderate.

Governor Perng also downplayed the concerns about inflation during a parliamentary hearing earlier this week, attributing the recent rise in CPI figures to food supply issues and saying that overall inflation risks remain manageable.

Here's more from DBS:

All these comments suggest that the CBC is not in a hurry to hike rates. The recurring risks of external slowdown are non-negligible.

The latest manufacturing PMI numbers continued to soften in Eurozone and Japan, despite the modest rebound in China and steady readings in the US.

So far, Taiwan's export industry has mainly benefited from the US's recovery and the increase in iPhone-related electronics demand.

Whether export recovery can be sustained and how fast the pace will be still remain to be seen.

In the meantime, the divergence in global central banks' monetary policy also complicates the policymaking process for small economies like Taiwan.

Amid heightened expectations of Fed tightening, the Taiwan dollar has depreciated against the greenback since the beginning of Sep, with the USD/TWD rate rising above 303 this week.

On the other hand, the expectations about BOJ and ECB easing have resulted in sharp depreciation of the JPY and the EUR, sparking concerns about competitive currency devaluation.

In light of the increased uncertainties in the global economy and financial markets, the CBC would prefer to take a wait and see approach before making any policy adjustments.

No rate change is expected at the next policy meeting in Dec14. We expect the CBC to start hiking rates only from Mar15.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia