Central Bank of China

PRESS RELEASE

Release Date: June 24, 2004




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Monetary Policy Decisions of the Board Meeting

Having carefully reviewed the recent financial and economic development, the Board of the CBC reached the following decisions in the meeting on June 24, 2004:

1. The accommodative monetary policy stance adopted by the CBC over the past three plus years has added considerable support to domestic economic activity. As it is expected that the economy will grow at a moderate pace and inflation will remain low while further improvement in the labor market is still needed, the Board decides to keep the discount rate, the rate on accommodations with collateral, and the rate on accommodations without collateral unchanged at their current levels of 1.375%, 1.75%, and 3.625%, respectively.

2. As Taiwan is a small and highly open economy, with the ratio of external trade in goods and services to GDP being above 100%, exchange rate movements impose significant influences on external trade and economic growth. The NT dollar exchange rate is in principle determined by market forces. However, when seasonal or irregular factors result in excessive volatility in the exchange rate of Taiwan dollar, the CBC will step in, as deemed appropriate, to maintain the dynamic stability of the exchange rate.

3. The CBC will continue to keep an eye on the international and domestic economy conditions and closely monitor prices, labor and financial market developments. The CBC will adjust its monetary policy stance when necessary to maintain price stability.