(Adds comments, details)
By Faith Hung and Jeanny Kao
TAIPEI, June 26 Taiwan's central bank kept its
policy rate unchanged at 1.875 percent, leaving the rate where
it has been for the last three years as its governor said a
nagging concern for the export-led economy was the uncertain
The central bank's quarterly policy meeting maintained an
accommodative monetary stance, as expected, though it decided to
take steps to cool property prices in the north of the island by
raising downpayment requirements for high-priced properties.
Consumer price inflation, at 1.61 percent in May, was below
the central bank's 2 percent comfort level, and Governor Perng
Fai-nan told a news briefing that inflation was under control.
Exports and domestic consumption have been in better shape
since last year, the governor said. But he voiced concern,
noting: "The global economic outlook is still uncertain."
The government has said that it expects Taiwan's economy to
grow at 2.98 percent this year, marking its best showing since
But, analysts saw the central bank's inaction on rates as a
sign of caution.
"It shows the central bank prefers to err on the safe side,
and appears to want to wait until more signs that the recovery
is sustainable and gaining speed, and until the upside risk to
inflation becomes more evident," aid economist Tony Phoo of
Standard Chartered in Taipei.
Most economists expect the central bank to track the U.S.
Federal Reserve and raise interest rates sometime next year.
Growth of Taiwan's exports and export orders in May missed
expectations, placing a questionmark over demand for the tech
products Taiwan specialises in, after the optimism generated by
April's export growth of 8.9 percent notched a 15-month high.
Industrial output has shown a steady upward climb, with the
index hitting a single-month record high in May, while the
jobless rate of 3.99 percent in May was the lowest since July
The stock market has also been booming. The main TAIEX share
index recently notched its highest closing level in more
than six years, and has attracted more inflows of foreign funds
than anywhere in Asia except India.
(Additional reporting by Michael Gold; Editing by Simon