Despite growing concern among consumers, Central Bank Governor Yang Chin-long said Taiwan's price increases are controllable and solid economic fundamentals will keep inflation under check. In addition, Yang acknowledges that real estate price increase is nationwide and the real estate market control measures of the Central Bank can be further strengthened.
Consumers have been complaining about the rising prices. Their fear of imported inflation is further compounded by the impact of the Russia-Ukraine war. However, Central Bank Governor Yang Chin-long said that Taiwan's prices rises are acceptable compared to other countries, with February's consumer price index rising by 2.36 percent, which is below market expectations.
Lin De-fu, Legislator (KMT): “Because the Central Bank doesn't want the public to notice further price increases so it refuses to acknowledge that there is already high inflation domestically.”
Yang Chin-long, Governor, Central Bank: “Generally speaking, inflation means price increase pressure comparatively is higher. If last year the CPI was 1.96 percent, I believe it is still okay in comparison to other countries. Look at the US, its CPI reached over 5 percent and same as Europe and UK. In the past, like in 2008, our CPI was 3.5 percent, so CPI at 2 percent seems okay.”
Yang attributed this wave of inflation to three factors: supply and demand disruption, slowing-down of port operations, and oil price increases. He also admitted that the war between Russia and Ukraine will inevitably lead to price hikes for most commodities as both countries are exporters of not only energy but also farm products. While Taiwan faces increasing pressure from imported inflation, Yang said stagflation is unlikely to occur due to the island's solid economic fundamentals. In response to inflation, the Federal Reserve will increase interest rates earliest this month. As to whether Taiwan will follow, all awaits in earnest concern.
Kuo Guo-wen, Legislator (DPP): “Governor, are you working on currency deflation step-by-step?”
Yang Chin-long, Governor, Central Bank: “We have over 500 billion in small and medium-sized enterprises loans which will be recovered at the end of June.”Kuo Guo-wen:“Yes, yes, yes.”
The government actively hunts down on real estate speculation, yet real estate price still continues to rise. Concerning this, Yang acknowledges that real estate price increase is nationwide and the real estate market control measures of the Central Bank can be further strengthened, including, among other potential options, enhancing controls over second units in districts with a higher rise in prices, or limitations on mortgage terms.