TAIPEI: Taiwan's central bank raised key interest rates by 0.125 of a percentage point Thursday in a bid to dampen inflation amid growing uncertainty over the economy. The central bank lifted its discount rate to 1.75 percent, and rates on accommodations with and without collateral to 2.125 percent and 4 percent, respectively. The increase was the fourth since June 2010. "This measure will help contain inflation expectations and safeguard price stability," Central Bank Gov. Perng Fai-nan said, adding that a rising New Taiwan dollar may also help offset price pressure. "We will continue monitoring economic conditions and apply appropriate policy tools in a timely manner to maintain financial stability." The central bank said booming exports have been driving production and consumer demand, resulting in a continuous improvement in employment. But the recent disaster in Japan has disrupted the global supply chain and casts a shadow on Taiwan's short-term economic outlook. The central bank also warned that Taiwan's consumer price index, which inched up by 1.21 percent over the first two months of 2011, looks set to hit 2 percent for the year on the back of surging commodity prices stemming from political unrest in the Middle East. But Perng said rising prices should not detract from government and central bank efforts to strengthen the local banking sector's credit risk management and curb real estate speculation. "Recent initiatives such as the proposed luxury tax will continue driving the housing market toward sound development," he added. Separately, Taiwan successfully concluded at the Taipei World Trade Center Thursday, bringing in business valued at US$4.02 billion to local manufacturing sectors from 470 corporations worldwide. Started in 2009 and co-organized by the Bureau of Foreign Trade and the Taiwan External Trade Development Council (Taitra), the fair is one of the most important state-sponsored campaigns aimed at promoting Taiwan as a global supplier of choice. This year's event was arranged with a focus on emerging economies given their increasingly important contribution to Taiwan's export growth, Deputy Minister of Economic Affairs Liang Kuo-hsin said. "With the government's continuous drive to promote Taiwan, we expect to see emerging markets account for 23.3 percent of the country's total exports this year.”
