Taiwan Discount Rate Held Steady at 1.25% as Expected

September 24, 2009

Taiwan’s discount rate was last reduced in mid-February by 25 basis points to a 55-year low of 1.25%.  In addition to six earlier cuts from September 26th to January 7, 2009, the discount rate had been lowered by 237.5 basis points in all from a prior peak of 3.625%.  Taiwan’s recession ended dramatically in the second quarter of 2009, with GDP growth of 20.7% at an annualized rate, but the level of GDP remained 7.5% less than a year earlier.  More recent activity and demand data show continuing improvement in many areas.  However, CPI inflation is expected to average minus 0.7% this year and only +0.9% in 2010.  Core inflation is only marginally positive.  A statement today from the Central Bank of the Republic of China called the structure of central bank interest rates and recent money growth “appropriate” and made no change in those rates.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.


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