Taiwan Tati Cultural and Educational Foundation

The massive protest march and rally in Taipei Saturday organized by the opposition Democratic Progressive Party and Taiwan Solidarity Union highlighted the continued anxiety in Taiwan over the unilateral drive by President Ma Ying-jeou and his Chinese Nationalist Party government to ink a bitterly controversial "Cross-Strait Economic Cooperation Framework Agreement" (ECFA) with the People's Republic of China.

Ma and other KMT officials and pro-KMT news media commentators have called on the opposition to accept the accomplished fact of the ECFA, which will be signed in Chongqing, China tomorrow by Taipei's Strait Exchange Foundation Chairman Chiang Ping-kun and Beijing's Association for Relations across the Taiwan Strait Chairman Chen Yunlin, and to monitor its implementation "rationally."

The central bank on Thursday surprised the market by announcing to raise its three benchmark interest rates by 12.5 basis points, effective Friday. Prior to Thursday, the central bank had cut interest rates by a total of 237.5 basis points since September 2008, and most economists had forecast the bank would not raise rates until later this year or early next year.

So, what was the main reason prompting the central bank to make its first rate move since February last year? Based on the bank’s press statement and what central bank governor Perng Fai-nan (彭淮南) said on Thursday, it was aiming to gradually bring market rates up to “normal levels” after it halted quantitative easing measures in March, because it was concerned about negative “real” interest rates — when the nominal interest rates are lower than the inflation rate.