Taiwan’s central bank is likely to keep interest rates at 1.875%. National Chengchi University finance professor Norman Yin made the prediction on Monday ahead of a central bank policy announcement on Thursday.
The inflation rate in May stood at 1.61%, which was higher than the targeted 1.53% for this year. That’s prompted market analysts to believe that the central bank might want to use an upcoming policy adjustment to reign in the imported inflation.
However, Yin said that Taiwan’s interest-rate policies usually follow the US Federal Reserve, which just announced last week that it will hold the rates steady. Therefore, he said, the central bank is unlikely to raise interest rates at this time.
“The United States was scheduled to raise interest rates in the middle of next year," said Yin. "But the Fed has postponed its plans to do so. This sent a signal that the US will not be implementing any deflationary measures in the near future, so Taiwan’s central bank will not rush to adjust interest rates now.”
Yin is predicting that Taiwan’s central bank will hold interest rates steady for a 12th consecutive quarter.