Taiwan’s economy could be affected if the US Federal Reserve decides to raise its interest rates. That was the word from a Taipei-based think tank, the Taiwan Institute of Economic Research (TIER), on Monday.
With the jobless rate dropping in the United States, the Federal Reserve is widely expected to hike up its interest rates as early as June. But the director of TIER’s economic forecasting center, Gordon Sun, said on Monday that many countries are implementing an expansionary monetary policy. Therefore, he said, the U.S. can achieve the effect of a tight monetary policy just by maintaining its interest rates at the current levels.
“If the United States hikes up its interest rates, funds from different countries will rush to the U.S. market," said Sun. "But since it’s not a good thing for the U.S. if the dollar appreciates too fast, the possibility of the Federal Reserve raising interest rates is decreasing. Analysts originally believed that the hike would come in the second half of 2015. But now, the market won’t be surprised if the U.S. postpones the hike until next year.”
Sun said that a rate hike would not only affect Taiwan’s stock market. He said that if the Taiwan dollar appreciates on the back of the U.S. dollar, Taiwanese exporters will not be able to compete with exporters in Japan, South Korea, and China.