The nation’s central bank is expected to leave key interest rates unchanged, but would increase restrictions on the property market to rein in market manipulation in its policymaking meeting this week, economists said.
At the last quarterly policymaking meeting held on March 21, the central bank surprisingly raised interest rates by 12.5 basis points, despite the US Federal Reserve maintaining its monetary policy a day earlier.
This time, the central bank is expected to leave interest rates unchanged in the meeting scheduled for Thursday.
Photo: Ann Wang, Reuters
The more than 2 percent growth in inflation was not necessarily problematic, as Taiwan’s inflation was relatively low compared with many other countries, Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) economist Wu Meng-tao (吳孟道) cited central bank Governor Yang Chin-long (楊金龍) as saying.
Taiwan’s consumer price index (CPI) last month rose 2.24 percent from a year earlier, higher than the 2 percent central bank target.
In the first five months of this year, the CPI grew 2.24 percent, also topping the 2 percent target, the Directorate-General of Budget, Accounting and Statistics reported last week.
Major central banks around the world, including the Bank of Canada and the European Central Bank, started rate cut cycles last week, while the Fed is likely to follow suit at some point later this year, Wu said.
Under such circumstances, Taiwan’s central bank would likely leave its monetary policy unchanged in the near future, he said.
Asked whether the local central bank would continue hiking rates to suppress the booming property market, Wu said any rate increase would be implemented to cap inflation, rather than reducing property transactions.
TIER researcher Arisa Liu (劉佩真) said she expects the central bank to announce a sixth round of select credit controls on the local property market on Thursday.
The number of transactions of homes, offices and shops in the six special municipalities increased 30 percent in the first five months of this year from a year earlier, government data showed last week.
In addition, Liu said many semiconductor suppliers and artificial intelligence technology developers have been increasing their talent pools, further boosting the property market.
Land transactions in Taiwan soared about 164 percent from a year earlier in the first quarter of this year, local news media reported.
Liu said strong land purchase growth by property developers was evidence of their faith in the housing market.
Since December 2020, the central bank has launched five rounds of select credit controls on the local property market.
Liu said the central bank would likely come up with measures including reducing the ratio of mortgages to the prices of second homes to increase its grip on the property market.
The central bank is also likely to cap bank lending for land purchases, Liu added.
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