Thursday, March 27, 2014

Taiwan holds rate on moderate growth, mild CPI outlook

    Taiwan's central bank left its benchmark rate steady at 1.875 percent, as expected, and said the government's budget office was forecasting higher 2014 growth despite a slowdown in China's growth and the U.S. Fed's scaling back on its asset purchases, which "might complicate the outlook for the global economy" due to cross-border spillovers and heightened financial market volatility.
    The Central Bank of the Republic of China (Taiwan), which has maintained its rate since June 2011,  said the rate was held steady due to its assessment of "moderate growth and mild inflation outlook in the domestic economy and lingering uncertainties in the global economy."
    Economic growth in the first quarter of 2014 is forecast at 3.02 percent and the full year forecast is 2.82 percent, up from in 2.11 percent in 2013. Fourth quarter Gross Domestic Product rose by 2.43 percent from the third quarter for annual growth of 2.95 percent.
    Employment is also continuing to rise, the bank said, particularly in the services sector with the unemployment rate down from 4.05 percent in February from January's 4.07 percent.
    Inflation is forecast to remain stable at an average 1.07 percent in 2014 amid mild global inflation expectations, muted domestic demand and a negative output gap.
    In February Taiwan's consumer prices fell by 0.05 percent from inflation of 0.76 percent in January. For the first two months of the year, consumer prices averaged 0.39 percent.


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