The central bank’s board of directors last month rallied behind a policy rate hold and a 25 basis point increase in the lenders’ reserve requirement ratio that would exert the same tightening effect as rate hikes in cooling the housing market, according to the minutes of the board meeting released yesterday.
Although the consumer price index would rise above the 2 percent target rate this year, the central bank’s discount rate also reached 2 percent, the highest in 15 years, rendering further tightening unnecessary, a director said.
Export data up to May showed that only shipments of artificial intelligence-related products recorded solid growth, whereas the remaining product categories stayed in contraction, the director said.
Photo: Chen Mei-ying, Taipei Times
A further rate hike would add a financial burden to non-technology sectors as well as small and medium-sized enterprises, the director added.
Another director urged the monetary policymaker to continue monitoring consumer price trends given that housing rent has grown in an unabated fashion.
Another said that sturdy economic growth and elevated inflation merited rate hikes, but the increase in the reserve requirement ratio would have a similar tightening effect conducive to dampening inflation.
Another director voiced concerns that housing rent had continued rising, as had the cost of dining out.
“It is therefore important the central bank stand steadfast in its fight against inflation and show firm resolve in doing so,” the director said, calling the rate hold “acceptable” alongside the reserve requirement ratio adjustment.
Several directors threw their weight behind a measure to cut the loan-to-value cap from 70 percent to 60 percent on second mortgages in the six special municipalities and Hsinchu.
The package would help curb money flows to the real-estate market and drive up borrowing costs, they said.
One director pointed out that an imbalance between supply and demand, especially a lack of new and presale housing, had helped spur the housing boom.
The fall in construction financing and advances in home loans lent support to the observation, the director said.
While the reserve requirement ratio adjustment would help contain real-estate lending, monetary policy tools alone cannot end the imbalance, which requires means outside the central bank’s duty and capacity, the director said.
Another director said interest rate adjustments would help cool the housing market, but warned that such practices would have a harmful impact on private investment and consumption.
Steep rate hikes would be needed to meaningfully chill house prices, making the hawkish approach ill-advised, the director said.
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