Taiwan's inflation has been much milder than those of major
economies like Europe and the United States, though a third
board member said they needed to be aware of public perceptions
of the problem.
The member "expressed the view that Taiwan remained under
inflationary pressures, noting that the inflation rate was
coming down but very slowly and the general public tended to
perceive inflation as higher".
The bank, at the March meeting, upped its consumer price
index (CPI) forecast for this year to 2.09% from a December
prediction of 1.88%.
Taiwan's March CPI rose 2.35% year-on-year, slightly
exceeding market expectations for a 2.22% rise.
With the export-dependent economy now in recession after
contracting for two quarters in a row, the central bank will
have to consider at its next scheduled quarterly meeting in
mid-June whether to keep tightening, stand pat or begin cutting
rates.
A fourth board member noted, however, that domestic demand
was "still sound" in contrast to softening external demand, and
that raising interest rates would not affect weakening overseas
demand for Taiwanese goods.
(Reporting by Liang-sa Loh and Ben Blanchard; Editing by Simon
Cameron-Moore)
TAIPEI, May 4 (Reuters) - Taiwan's central bank debated
the need for further rate hikes this year to combat persistent
inflation, minutes from its last board meeting showed on
Thursday.
The central bank, at its quarterly board meeting in March,
unanimously decided to raise its policy rate by
12.5 basis points (bps) to 1.875%, a surprise move reflecting
concerns about inflation.
One board member, whom it did not identify, said economic
growth was likely to rebound in the rest of the year following a
first quarter contraction, but inflation would likely only drop
below 2% in the fourth quarter.
"In this economic context, it would be necessary for the
bank to maintain its policy stance with further rate hikes," the
minutes cited the member as saying.
Another board member said that "if inflation stays elevated,
further rate hikes could be warranted".
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