Taiwan Central Bank Holds Discount Rate at 1.875%

The Central Bank of the Republic of China (Taiwan) held its discount rate unchanged at 1.875% and the collateralized loan rate at 2.250% and the unsecured loans rate at 4.125%.  Bank Governor, Perng Fai-nan, said: "A global slowdown and consumer prices stabilizing led to the decision," and further noted "Taiwan's imported inflation will cool as global prices ease in the next three months after peaking in the third quarter."  Perng also noted on the recent deterioration in conditions: "Taiwan's economy won't be as bad as back in 2008,".

Taiwan's central bank last raised the discount rate 12.5 basis points to 1.875% at its July meeting this year, also raising 12.5 basis points in March.  The Bank also recently raised the minimum liquidity requirements ratios.  Taiwan reported annual consumer price inflation of 1.32% in July, compared to 1.93% in June, 1.7% in May, and 1.3% in April this year, meanwhile the government is forecasting 2011 inflation of 2.1%.  The Taiwan economy grew 5% year on year in the June quarter (6.2% in Q1 2011); slower than 2010's 10.9% economic growth rate, according to the Directorate General of Budget, Accounting and Statistics.

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