Central bank forecast to raise key interest rates in December: ANZ
CNATAIPEI--The Central Bank of the Republic of China (Taiwan) is likely to raise its key interest rates at its next quarterly policymaking meeting in December, after retaining the same rates for nine consecutive quarters, according to Australia and New Zealand Banking Group Ltd. (ANZ).
September 29, 2013, 12:03 am TWN
“We continue to pencil in the first rate hike in December this year, but the interest rate outlook will largely depend on the U.S. tapering schedule,” the bank said in a recent note.
Taiwan's interest rate profile will continue to face growing pressure, despite the U.S. Federal Reserve's decision to hold the current scale of asset purchase, ANZ said.
Taiwan's central bank decided on Sept. 26 to maintain the 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, in line with market expectations.
The decision was “consistent with the macroeconomic profile with a moderate growth outlook in a low inflation environment,” ANZ said.
The central bank expects the Taiwan economy to grow moderately in the last quarter of the year, driven by stabilizing demand from the U.S., Europe and China, ANZ said.
Tony Phoo, an economist at Standard Chartered Bank in Taiwan, expressed a similar view, saying that the central bank's policy makers will likely consider resuming a rate-hike cycle in the near future.
The planned price hikes in electricity in October will drive up inflation in the last quarter of the year and into 2014, Phoo said, adding that a temporary surge in food prices could also be expected as a result of recent typhoons.
The central bank will raise its key interest rates in the first quarter of 2014 if there are increasing signs that the current growth rebound is sustainable, Phoo forecast.