Taiwan keeps discount rate at 1 7/8% as economic growth stabilizing

By Tali David

Minneapolis, Dec. 19 - The board of the Central Bank of the Republic of China (Taiwan) unanimously voted to keep the discount rate unchanged at 1 7/8% at its policy meeting on Thursday.

The board also decided to maintain the rate on accommodations with collateral at 2¼% and the rate on accommodations without collateral at 4 1/8%, while setting the target range of M2 growth at 2.5% to 6.5% for 2013.

The board said that recent developments point to signs of stabilization for the global economy, with an improved outlook for 2013. The euro zone recession has eased and the U.S. economy looks set for moderate expansion, according to a press release.

China has regained growth momentum and Asian emerging economies also see a rebound in prospect. Nonetheless, uncertainties surrounding the U.S. fiscal cliff and the European sovereign debt crisis still pose risks, the bank said in the release.

The bank reported international raw material prices have stabilized recently. For the year, the CPI annual growth rate to average 1.93% for the year 2012 as a whole and to ease to 1.27% next year on account of steady price trends anticipated for international commodities next year and a lower base effect for fruit and vegetable prices.

The bank said the interbank overnight call loan rate remained stable. For the first 11 months of this year, the average annual growth rate of bank loans and investments was 5.03% and the M2 annual growth rate averaged 4.22%,

Domestically, the economic growth was estimated to improve to 2.97% in the fourth quarter of this year from last quarter's 0.98%. The Directorate-General of Budget, Accounting and Statistics said the domestic economy is forecast to expand by 3.15% in 2013, with a somewhat mild growth momentum.

According to the release, in assessing recent developments and future prospects, the board took into consideration the global economic uncertainties, a modest domestic recovery and subdued inflationary pressures.

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