每日英語跟讀 Ep.K444: Taiwan set for modest rate hike as growth slows
Taiwan’s central bank increased its benchmark interest rate by a modest amount on Thursday last week, the third hike this year, as it tries to battle inflation without further weighing down its slowing economy.
The central bank raised its policy rate by 12.5 basis points to 1.625 percent, in line with forecasts of most economists surveyed by Bloomberg. The bank also raised its reserve requirement ratios by 0.25 percentage points.
The central bank’s decision came hours after the US Federal Reserve hiked interest rates by 75 basis points, the fifth increase this year, to tame rampant inflation. Taiwan’s policy makers have been able to be more flexible in their rate hikes, with inflation peaking in the second quarter amid a slowdown in the economy. The central bank raises its rate by a smaller-than-expected 12.5 basis points in June and by 25 basis points in March.
Higher interest rates may help to bolster Taiwan’s dollar, which has slumped this year on the back of a stronger US currency, weaker export demand and rising geopolitical tensions. The local dollar was down 4.8 percent against the greenback in the past month, the third-worst performer among Asian currencies.
Taiwanese officials have sought to balance tempering inflation without hurting its economy, which has been weighed down by sluggish demand from China, the impact of COVID-19 restrictions on supply chains, and other global headwinds. The government has already cut its 2022 growth forecast twice this year to 3.76 percent.
“Taiwan’s economic slowdown is very apparent, with export growth only in the single digits and manufacturing PMI shrinking,” Ma Tieying, an economist at DBS Group Holdings Ltd, said before the rate decision. “The risk of Taiwan’s economic downturn is very high, so from this point of view, increasing by 12.5 basis points is a compromise option and the best option.”
Economists surveyed by Bloomberg have also revised down Taiwan’s GDP to 3.2 percent for this year. Those polled also expect that Taiwan will raise interest rates again in the fourth quarter to 1.75 percent.
Export orders from the island have started to slow, gaining 2 percent in August from a year earlier, with orders from China and Hong Kong falling more than 25 percent. Manufacturing is also coming under pressure, with the purchasing managers index dropping in August to 42.7 — its lowest reading since May 2020.
來自台灣的出口訂單開始放緩，八月份比去年成長百分之2，其中來自中國大陸和香港的訂單減少超過百分之25。製造業也面臨壓力，採購經理人指數八月降至42.7，為二○二○年五月以來最低。Source article: https://www.taipeitimes.com/News/lang/archives/2022/09/27/2003785961