Taiwanese Central Bank likely to stand pat in December – DBS bank
Source: FxWire Pro - Commentary / 18 Dec 2017 13:52:13 Eastern Standard Time
The Taiwanese central bank is set to meet this week for its monetary policy decision. According to a DBS Bank research report, the CBC is likely to keep the benchmark discount rate on hold at 1.375 percent. There is not much urgency for the central bank to hike rates. In spite of the recent rebound in the economic growth, the output gap continues to be slightly negative and inflation pressure continues to be muted.
In the meantime, the degree of monetary accommodation has been lowered slightly in 2017. This is because firstly real interest rates have risen due to deceleration in the CPI inflation, while secondly money supply growth has slipped below the central bank’s mid-point target rate. And thirdly, the TWD has strengthened against the USD and outperformed many other Asian currencies, stated DBS Bank.
Meanwhile, data releases this week are expected to indicate that export orders and industrial production have decelerated in November, mainly because of high base effects. The underlying growth momentum is expected to have stayed strong, given the rise in Nikkei manufacturing PMI to a six-year high, stated DBS Bank.
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