Interest Rates, Selective Credit Control Unit, Room for fear? Fai-Nan Perng: Do the right thing

June 24th, 2010 by admin Leave a reply »

Taiwan – Contrary to expectations, the central bank of Taiwan raised interest rates, and adopted selective control over the housing market  due to issues with stock markets, raised fears of terrorism , and the collapsing housing market. In this regard, the central bank president Fai-Nan Perng stressed that ” the central bank needs to do the right thing ” and stressed ” this is a very very relaxed fine-tuning and will not affect the general mortgage.”

Fai-Nan Perng emphasized the main reason the Central Bank Council decided to raise interest incorporates three major factors. First, continuing global economic recovery , benefit from the emerging countries of Asia and other major trading partners needs to heat up, China’s exports and investment to expand the company and unemployment situation has also gradually improved. This is coupled with a moderate increase in private consumption , making this yearly quarter’s economic growth rate of 13.27% . In addition there has been a  better than expected  economic performance of domestic and foreign institutions that have revised Taiwan’s economic growth forecast this year. In May this year, the Bureau of Statistics reported the economic growth rate to be 4.72% of the original estimate and was revised to 6.14 percent .

Second, with the warming of global demand , pushing up oil and other international raw material market , the domestic retail market prices all reflect the cost increase , from January to May this year, which is the domestic consumer price (CPI) annual growth rate of 1.19%. DGBAS forecast for this year by the CPI annual rate of 1.27% was revised to 1.4%.

Third, since the second half last year , because domestic economy has warmed , the central bank gradually exited its quantitative easing policy allowing bank excess reserve positions to be reduced to normal levels. This has been connected with a gradual increase in the overnight rate , M2 growth target zone annual growth rate back to the middle Value in the vicinity  since April this year.


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