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Bank expected to keep base rate low

TAIPEI--Taiwan's Central Bank is expected to maintain its current base rate of 1.875 percent when it holds its quarterly board meeting Dec. 26, according to analysts.

It is likely to be the 10th time that the bank is maintaining its discount rate at the level since the quarterly meeting of its board of directors in September 2011.

Tony Phoo, chief economist at Standard Chartered Bank, predicted that interest rates will go up in Taiwan although the Central Bank will not adjust its discount rate just yet.

He forecast that the base rate will not rise before the first quarter of 2014, citing increases in electricity rates and the cost of high-speed rail travel, which he said will gradually increase inflation pressure.

Barclays Capital also projected that the Central Bank will maintain its low base rate, saying Taiwan's economic recovery has been slow and inflation remains moderate.

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