Thursday, March 28, 2013

Taiwan holds rate steady on mild recovery, muted inflation

    Taiwan's central bank held its benchmark interest rate steady at 1.875 percent, as expected, saying the current stance was appropriate as the country's economy was "experiencing a mild recovery along with muted inflationary pressures."
    The Central Bank of the Republic of China (Taiwan), which has held its discount rate unchanged since June 2011, said economic activity had picked up since the fourth quarter due to better-than-expected exports and private consumption.
    The government's budget, accounting and statistics directorate has revised upwards its forecast for first quarter Gross Domestic Product growth to 3.26 percent and "bolstered by the world's moderate economic expansion, exports and private investment will likely drive the domestic economy to grow by 3.92% in the second quarter and 3.59% for the entire year," the central bank said.
    In December, the bank said it forecast 2013 GDP growth of 3.15 percent.
    For the first two months of this year, consumer price inflation averaged 2.05 percent but core inflation only grew by 1.25 percent, the bank said.

    It added the government projects 1.99 percent inflation for the first quarter, then 1.40 percent in the second quarter due to recent falls in international commodity prices and base effects of last year's fuel and electricity price hikes. For the full year, inflation is forecast at 1.37 percent.
    The central bank has tightened controls on mortgages and land financing to keep property prices from rising too fast and it said that it was keeping a close watch on real estate lending and urged financial institutions to ensure sound operations and thus preserve financial stability.



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