Taiwan: CBC to cut again in Q2 and Q3 – Standard Chartered

Taiwan’s central bank (CBC) cut its rediscount rate on 19 March. Analysts at Standard Chartered Bank expect lower growth and inflation and more cuts. USD/TWD trades at 30.224.

Key quotes

“CBC cut its rediscount rate by 25bps to 1.125%, , taking the benchmark policy rate to a record low.”

“We now expect it to cut 25bps in Q2 . We also now expect a further 12.5bps rate cut in Q3 to counter the coronavirus impact.”

“We now expect 2020 growth of 0.6% (down from 1.9% previously), as we see a more severe impact on exports and manufacturing.” 

“We raise our 2021 forecast to 3.3% (from 2.8%) given the low base and the expected resumption of delayed consumer spending.” 

“We now expect the economy to contract 0.5% y/y in Q2 and 0.2% in Q3.”