The hawkish directors criticized the central bank for only raising half a yard at a time, which is too slow.

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[Reporter Chen Meiying/Taipei Report] The central bank released the minutes of the meeting of the board of directors and supervisors in March. At least 5 directors mentioned the impact of electricity price hikes on inflation. Views on whether to continue raising interest rates in the future are divided.

Some hawkish directors pointed out that in the past, the central bank raised interest rates by half a yard too slowly. This approach may cause Taiwan’s long-term low interest rates and fall into a liquidity trap.

However, some directors believe that the magnitude of interest rate adjustments cannot be compared in different environments. Therefore, it is impossible to use the same standard to judge whether the magnitude of the adjustment is large or small. This may be an issue that needs to be considered in the future.

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The Board of Governors and Supervisors of the central bank in March obtained the "unanimous" approval of all the directors to raise interest rates by half a yard after a violation of two quarters. The hawkish directors who insisted on raising interest rates by one yard in the past agreed to only raise interest rates by half a yard this time, mainly because of international economic and financial considerations. The uncertainty of the situation is still high, especially when the liquidity problems of many banks in Europe and the United States are breaking out.

Judging from the information disclosed in the meeting minutes, many directors mentioned that the current domestic inflation rate is still high, and the forecast value of this year’s inflation rate has been revised up to more than 2%, indicating that inflationary pressure is still there, and electricity prices have been raised since April. It may put pressure on future price increases, and this year, the 17 important people's livelihood items that are closely related to the people have increased faster than the overall CPI annual growth rate, which is more likely to push up inflation expectations.

If the central bank can express a firm stance against inflation at this time, it will help lower people's inflation expectations.

A director pointed out that if the interest rate is raised by half a yard this time, although it will help reduce the range of negative interest rates, Taiwan's real interest rate has been negative for three consecutive years, and it is appropriate to pay attention to its impact on the economy and finance.

Another director said that if inflation can be suppressed in the future, the real interest rate is expected to turn positive, but if inflation remains high, it may be necessary to continue to raise the policy interest rate.

A director believes that the increase in the annual growth rate of domestic CPI is mainly due to the continuous impact of unexpected events such as the epidemic and the war between Russia and Ukraine, which have pushed up international energy and food prices. The central bank has adopted a gradual and moderate monetary tightening policy since March last year. , driving the average one-year time deposit mobile interest rate of the five largest domestic banks to rise.

The director said that the interest rate will be raised by half a yard in March, and the inflation rate is expected to fall this year, and the negative real deposit interest rate (fixed deposit interest rate minus the annual growth rate of CPI) will shrink; compared with major economies, this The level of domestic real deposit interest rates in 2019 is still moderate, and the real deposit interest rates of most major economies are also negative.

It is expected that in the first half of this year, affected by weak exports and investment, the domestic economic growth will be sluggish, and the international economic situation is still highly uncertain. Negative real interest rates should help boost economic growth.

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