The central bank is likely to keep key interest rates unchanged at this year’s first quarterly board meeting on Thursday, as the nation has yet to fully recover its economic momentum, based on current economic indicators, economists said yesterday.
The central bank is expected to keep its policy rates unchanged for the third straight board meeting, with the rediscount rate at 1.875 percent, the collateralized loan rate at 2.25 percent and the unsecured loan rate at 4.125 percent.
“Generally, the market consensus is that the bank will not change key interest rates at the board meeting this week,” Tony Phoo (符銘財), a Taipei-based economist at Standard Chartered Bank, said by telephone.
Although the global economy has bottomed out, external demand remained weak in the first two months and it was no time to be raising policy rates, Phoo said.
However, the central bank would also be keeping in mind inflation, in light of the recent rise in crude oil prices, and this would be the other factor affecting the central bank’s decision, he said.
The bank would be more likely to hold rates unchanged until annual growth in consumer prices really did show signs of inflation, Phoo said.
He said Standard Chartered Bank expects the central bank to hold rates steady for the rest of the year, and perhaps raise rates in the first quarter of next year depending on the degree of recovery in the economy and sentiment.
Taiwan Research Institute (台灣綜合研究院) president Wu Tsai-yi (吳再益) shared Phoo’s views.
“Under current economic conditions, the central bank does not have much leeway in its interest rate policy,” Wu said.
Wu said Taiwan’s economy has yet to fully bottom out, with private investment continuing on a downtrend, and the central bank would not exacerbate matters by increasing rates.
Markets are waiting to see what measures the government takes to rationalize fuel and utility prices, and the effect this will have on consumer prices in the near term, but there is as yet no sign of inflation, Wu said. The bank will act prudently and take a long time to evaluate the situation before it raises rates, he added.
Meanwhile, the central bank is expected to continue the selective credit control measures that have been in force for more than a year to cool the housing market, said Cheng Cheng-mount (鄭貞茂), chief economist at Citigroup in Taipei.
“Although the measures have had a definite impact on property transactions, the central bank may leave them in place, since they have not driven down [urban] real-estate prices very much,” Cheng said.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS