TAIPEI : A cautious approach and effective monetary and foreign exchange policy has helped Taiwan avoid the need to follow the U.S. and Europe in adopting large-scale quantitative easing measures, Taiwan's central bank said on Tuesday.
While Taiwan has followed major economies in raising interest rates to control inflation, it has done so at a much more moderate pace, reflecting the island's comparatively low level of inflation.
At its quarterly board meeting in March, Taiwan's central bank raised its policy rate by 12.5 basis points (bps) to 1.875 per cent.
"The bank has adopted effective monetary, credit, foreign exchange policies and overall prudent measures in a timely manner to help our country's stable economic and financial growth and avoid financial crises," the central bank said in a report to lawmakers.
The central bank "has not needed to adopt large-scale quantitative easing policies like in Europe and the United States and the bank's assets have not expanded significantly", it added.
The central bank has for a long time adopted "appropriate" monetary, credit and foreign exchange policies and has reached its statutory objectives of maintaining financial, price and exchange rate stability, it said.
The central bank also maintains a "certain degree of monetary policy autonomy", it said.
The Taiwan dollar's exchange rate versus the U.S. dollar is less volatile than that of other currencies, it added.
The central bank holds its next rate-setting meeting in mid-June, where it will have to consider its response given the export-dependent economy is now in recession after contracting for two quarters in a row.