Taiwan poised to keep benchmark interest rate unchanged

Bloomberg

Taiwan’s central bank will keep its benchmark interest rate unchanged on Thursday as a brewing trade war adds to risks facing the export-oriented economy, according to a Bloomberg survey.
A majority of 33 economists said Taiwan will hold the discount rate for banks at an eight-year low of 1.375 percent, while only three predicted an increase of 12.5 basis points to 1.5 percent, the survey showed.
Holding rates for now even while the US Federal Reserve sees a faster pace of increases this year may help soften the knock-on effects that the tension between the US and China could have on a supply-chain link like Taiwan. With investment sluggish and inflation muted, economists see little urgent need for the central bank to mirror its US counterpart.
Central bank governor Yang Chin-long said during a meeting with lawmakers in April that there was little chance Taiwan would hike interest rates in the near future. Yang, who replaced former governor Perng Fai-nan in February, has said that monetary policy doesn’t necessarily need to “surprise” markets.
“This is Yang’s new style — send a clear signal and prevent markets from falling into speculation,” said Rick Lo, chief economist at Fubon Financial Holding Co. in Taipei, adding that trade tensions and an unclear recovery momentum in major economies have clouded the global outlook, and the central bank may want to hold decisions until more economic data become available.
The central bank will for the first time broadcast the governor’s briefing live via their website and YouTube after Thursday’s meeting.