TAIPEI: Taiwan’s central bank will make “appropriate” and timely use of monetary policy to achieve price stability and help economic growth, it says.
In a surprise move last month, the central bank raised its benchmark interest rate and by a much bigger margin than some expected.
It cited concerns about inflation which have been driven by supply chain disruptions from the war in Ukraine.
The bank, in a report to parliament, said it would pay attention to changes in global raw material prices, the Covid-19 situation at home, geopolitical risks and the direction of monetary policy in major economies.
It would “make appropriate use of monetary policy in a timely manner” to stabilise prices and help economic growth.
However, it gave no details on the timing of any policy changes.
Governor Yang Chin-long, who will take lawmaker questions soon, said at the last month monetary policy meeting it would continue to move in the direction of tightening, but declined to say whether the rate rise would be the start of a longer hike cycle.
Taiwan’s March consumer price index rose an on-year 3.27%.
This was a more than nine-year high and the eighth month in a row it had increased beyond the central bank’s 2% warning line, driven by rising global energy costs due to the Ukraine war.
However, the bank’s report noted that compared to Europe and the United States, Taiwan’s inflation remained “mild”.
The bank in March also nudged up its 2022 estimate for gross domestic product growth to 4.05% from 4.03% seen in December, saying export momentum remained strong.
Its report to parliament reiterated that the bank saw growth this year exceeding 4%.
Taiwan’s trade-dependent economy has seen encouraging export numbers so far, which jumped 23.5% year-on-year in the first quarter.
Taiwan is a major semiconductor producer.
The global shortage of the component has kept Taiwanese chip firms’ order books full, pumping up exports. — Reuters