Taiwan’s central bank is likely to leave its key interest rates unchanged, with the discount rate standing at 1.875%. That’s the word from Dr. Chu Hau-min of National Chengchi University on Monday.
Chu said that the central bank might decide to keep its key interest rates the same for the 14th consecutive quarter at its upcoming policymaking meeting in order to maintain ample liquidity and give a further boost to the local economy.
Chu also said that inflationary pressures brought about by stimulus measures around the world have been defused by plummeting oil prices. Therefore, he said that the US is unlikely to raise interest rates in the first half of next year.
“People were originally worried about inflation because of stimulus measures taken by central banks around the world," said Chu. "But now it seems like deflation is the problem that countries should be concerned about. In fact, consumer prices in Taiwan have been holding steady over the past few months, if not going down. Therefore, the central bank has no need to hike up interest rates or lower them. Market consensus believes that interest rates will remain unchanged.”
Dr. Chu said that if crude oil prices continue to drop, it might trigger a deflation crisis and impact Taiwan’s economy. But market analysts believe that there is currently ample liquidity on the financial market in Taiwan. So, for the moment, Chu said he does not believe that the central bank will lower interest rates to prevent deflation.