Taiwan’s central bank is expected to keep its policy rate steady at a record low this week as the economy continues to bounce back from the COVID-19 pandemic, supported by strong export growth, a Reuters poll showed on Monday.
The central bank is seen leaving the benchmark discount rate unchanged at 1.125% on Thursday at its quarterly meeting, all 12 economists in the poll said, after holding fire at its past three meetings. It last cut the rate in March of 2020.
Taiwan’s export-reliant economy has been supported by global demand for tech products from an increasing number of people working from home during the pandemic. That trend is expected to continue and help underpin a rapid economic recovery this year.
Gross domestic product (GDP) is expected to expand 4.64% this year, the Directorate General of Budget, Accounting and Statistics said last month, its fastest since 2014.”This year’s growth rate should be significantly better than last year,” said Tony Phoo, Standard Chartered’s senior Taipei-based economist, adding there was currently no need for the central bank to make any adjustment to rates.
While Taiwan’s tech firms were doing well, that is not the case for some other industries, he added.
“As for when is the best time to adjust interest rates, that won’t need examining until next year.”
Taiwan has the pandemic well under control thanks to early and effective prevention work, and currently has only 29 active cases being treated in hospital.
Life has continued almost as normal, though Taiwan’s borders remain largely closed to most foreign visitors.
The central bank will also give its own revised forecast for economic growth this year on Thursday, having predicted a 3.68% expansion at its last quarterly meeting in December, with exports expanding strongly.
Governor Yang Chin-long said last week he foresaw a sharp “v-shaped” recovery this year.
Taiwan’s manufacturers, including Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chip maker, are a key part of the global supply chain for technology giants such as Apple Inc.