COST OF LIVING/Bank of Taiwan to raise deposit rates after surprise central bank hike

Taipei, March 23 (CNA) Bank of Taiwan, the largest lender in the country, will raise the benchmark one-year time savings deposit rate to a 15-year-high 1.715 percent from Monday following a surprise central bank rate hike.

Bank of Taiwan said the increase reflected a 12.5 basis point key interest rate hike instituted by the Central Bank of the Republic of China (Taiwan) on Friday.

The country's state-owned lender will also raise its two-year time savings deposit rate and three-year time savings deposit rate by 0.125 percentage points to 1.750 percent and 1.785 percent, respectively.

According to Bank of Taiwan, the new rates will see one-year time savings depositors who have NT$1 million (US$31,291) in their accounts receive more than NT$17,280 in annual interest payments up from the current NT$16,020 in compound rate calculation.

On Thursday, the local central bank said it would raise key interest rates the next day in light of higher Taiwan Power Co. (Taipower) electricity tariffs effective April 1.

After the latest rate hike by the central bank, Taiwan's benchmark discount rate has increased to 2 percent.

The central bank said that it has revised Taiwan's CPI growth to 2.16 percent for 2024 above the 2 percent alert level it set as well as an earlier 1.89 percent forecast made in December, prompting it to raise rates for the first time since March 2022.

The central bank's decision came as a surprise since the U.S. Federal Reserve decided on Wednesday U.S. time to leave interest rates unchanged.

With the changes, Taiwan's rate on accommodations with collateral has also risen to 2.375 percent, and on accommodations without collateral to 4.250 percent, according to the central bank.

From March 2022 to March 2023, the central bank raised interest rates by 75 basis points, which led Bank of Taiwan's one-year time savings deposit rate to move up to 1.59 percent from 0.84 percent.

Bank of Taiwan had also increased interest payments on deposits of NT$1 million to almost NT$16,020 from about NT$8,340 a year in compound rate calculation during the same period.