Monetary Policy Decisions of the Board Meeting(December 27, 2001)
PRESS RELEASE Release Date: Dec. 27, 2001
--------------------------------------------------------------------------------
MONETARY POLICY DECISIONS OF THE BOARD MEETING
In line with the deliberations made at the Board meeting on December 27, the
future directions for monetary policy of the Central Bank of China (CBC) shall
be the following:
1.To maintain the dynamic stability of the NT dollar exchange rate, the CBC will
step in, as deemed appropriate, when the foreign exchange market is disrupted by
seasonal or irregular factors, or by irrational expectations.
2.The M2 monetary aggregate is the intermediate target of the CBC's monetary
policy. After considering the economic growth and price conditions for next
year, measuring the impacts of domestic and foreign interest spread, capital
gain differential and financial asset diversification on money demand, as well
as consulting scholars and experts, the Board sets the target range for M2
growth at between 3.5% and 8.5% for 2002.
3.The country's performance in import-export trade, industrial production,
capacity utilization rate of the manufacturing sector and corporate profits
remains weak. The imminent entry to the World Trade Organization anticipates a
period of adjustment in industrial structure. The banking sector remains
sluggish in extending credit. Under these circumstances, the CBC seeks to
stimulate the economy by cutting the discount rate, the rate on accommodations
with collateral and the rate on accommodations without collateral by 12.5 basis
points to 2.125%, 2.5% and 4.375%, respectively, effective from December 28.
4.To meet the seasonal fund demand over the new year, the CBC has appropriately
arranged the maturing dates of the certificates of deposits it issues. The CBC
will also fully support financial institutions encountering short-term liquidity
shortage through open-market operations, the discount window and other
accommodation measures.