© Reuters. FILE PHOTO: A Taiwan flag is seen on top of Taiwan’s central bank in Taipei, Taiwan, December 14, 2022. REUTERS/Ann Wang
TAIPEI (Reuters) – Taiwan will weigh both inflation and economic growth when deciding on its next interest rate in June but the island’s economy may not recover until the fourth quarter, the governor said. central bank Yang Chin-long said on Wednesday.
Although Taiwan has followed the major economies in raising interest rates to control inflation, it has done so at a much more moderate pace, reflecting the island’s relatively low levels of inflation.
At its most recent quarterly board meeting in March, Taiwan’s central bank raised its policy rate by 12.5 basis points (bps) to 1.875 percent – the fifth increase since it started. the beginning of the current tightening round last March.
Asked at a congressional committee session if there would be another rate hike during the June 15 quarterly rate-setting meeting, Yang said they would look at both inflation and growth. economic chief.
The export-dependent economy is now in recession after two consecutive quarters of contraction.
Taiwan’s central bank often signals interest rate moves from the United States.
When asked if he thinks the US Federal Reserve will raise interest rates again in June, Yang said market expectations for that to happen are not high and that US inflation is under control.
He added that Taiwan has also controlled inflation “quite well” compared to other countries.
Yang said the global economy this year will likely perform worse than last year, and Taiwan’s economy may not recover until the last three months of 2023.