(Bloomberg) -- Taiwan’s central bank kept borrowing costs unchanged, reflecting confidence in an economy where the stock market is near a record high, exports are booming and the Covid-19 pandemic is being held at bay.
Policy makers kept the benchmark interest rate at 1.125%, as predicted by all of the 31 economists surveyed by Bloomberg. The central bank raised its forecast for economic growth this year to 1.6% from the 1.5% it forecast in June.
It was the second quarter of holding the rate steady since cutting it in March, when Taiwan’s exports began falling and the stock market dropped due to the pandemic’s impact on the global economy. Since then, exports have jumped to a record-high $31.2 billion in August, while the Taiwan Stock Exchange’s main index has rebounded to reach a record high Wednesday.
The central bank is unlikely to change rates through the end of 2022, according to the median estimate in a Bloomberg survey of economists conducted over the past week.
The central bank’s focus is likely to be on the currency, which appreciated sharply against the dollar in the first half of the year, impacting both exporters as well as Taiwan’s massive life insurance sector, which manages $1 trillion in assets. The central bank has been stepping in during trading to “smooth” gains made by the local dollar against the greenback, although it denies this is intervention.