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CBC keeps interest rates unchanged.

Taipei, March 23, 2012 (CENS) -- The board of directors and supervisors of the Central Bank of China (CBC) resolved yesterday (Feb. 22) to maintain policy interest rates at the existing level.

Perng Fai-nan, CBC governor, stressed that the CBC is adhering to a "properly loose" monetary policy, which will be adjusted according to the status of inflation.

The board of directors and supervisors of the CBC attributed the decision to keep policy interest rates at the existing level to sluggish domestic economy and upside risk of inflation. As a result, discount rate, accommodations with collateral, and accommodations without collateral will stay at 1.875%, 2.25%, and 4.125%, respectively.

Since last September, the CBC has maintained policy interest rates unchanged for three quarters in a row. Perng noted that while Taiwan's economic growth will rise quarter by quarter this year, there is no immediate inflationary risk in the first half, justifying the maintenance of interest rate at the current level.

Perng remarked that price stability takes precedence over economic growth in the consideration of the CBC's monetary policy. Comparison base for this years inflation rate is lower, thanks to the good weather last year, according to Perng. The domestic economy may face the pressure of hikes for oil prices and power rates; 10% of oil price hike, for instance, will boost consumer price index by 0.37 of a percentage point.

The governor appears to be rather upbeat about the global economic outlook, citing the respite of the European-debt crisis and good retails figures and declining unemployment rate in the U.S. The most worrisome issue is possible soft landing of the Chinese economy, which will affect Taiwan's economic performance.
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Title Annotation:Central Bank of the Republic of China
Author:Liu, Philip
Publication:The Taiwan Economic News
Article Type:Brief article
Geographic Code:9TAIW
Date:Mar 23, 2012
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