Taiwan holds rate, global outlook moved by market turmoil

    Taiwan's central bank held its key interest rates steady, including the benchmark discount rate at 1.875 percent, in light of global economic uncertainty, modest domestic economic recovery and reduced inflationary pressures.
    The Central Bank of the Republic of China (Taiwan), which has held the discount rate steady since June 2011, said it expected the rate decision to "help prices and overall economic stability" and the global economy was recovering at different speeds.
    The central bank added the global economic outlook was being affected by the turmoil in global financial markets from the U.S. preparing to exit quantitative easing, liquidity issues on the Chinese mainland "together with a large number of international short-term capital movement."
    The domestic economy contracted by 0.69 percent in the first quarter from the fourth, for annual growth of only 1.67 percent due to weak external demand and conservative private consumption with the comptroller head office forecasting growth of 2.40 percent this year, down from the bank's December forecast of 3.15 percent.
    Taiwan's inflation rate eased to 0.74 percent in May from 1.05 percent due to stable raw materials and weak consumption with the comptroller forecasting inflation of 1.14 percent in the second half of the year, down from 1.23 percent.

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