(Bloomberg) -- Taiwan central bank Governor Yang Chin-Long reiterated interest rates won’t be used to influence property prices, saying the cost of doing so would outweigh the benefits. 

Policy makers will raise borrowing costs at an appropriate time, which will have an impact on housing prices and help make targeted credit control measures more effective, Yang said in a speech published on the central bank’s website. Interest rates shouldn’t be adjusted based on the prosperity or decline of a single industry, and should be used to stabilize the overall economy, he said.

In the January edition of The Taiwan Banker magazine, Deputy Governor Chen Nan-kuang said the central bank should consider adjusting interest rates to rein in the housing market, in contrast with earlier comments from Yang. Chen said loose monetary policy is a major reason for rising house prices and interest rates should be included as one of the policy tools to tame prices. 

He added that the central bank should assess its policies and take necessary action as early as possible when dealing with house prices and should stop using “high housing prices can’t be solved by a single department” as an excuse. Adjusted for inflation, housing prices in Taiwan have gained more than 160% over the past 20 years, much higher than the 45% gain in South Korea and 64% in the U.S. respectively, according to Chen.

Taiwan Housing Concern Splits Central Bankers Over Rate

The central bank has kept borrowing costs unchanged at a record low since 2020, although some economists are predicting rate hikes this year. Yang also said last month a rate increase was likely in 2022.

The governor in his speech said recent selective credit controls implemented to rein in the housing market are wider in scope, more diverse and stronger than previous measures. Interest rate increases will only be considered to deal with inflation, balance the economy’s recovery from the impact of the Covid-19 pandemic, and as major economies hike borrowing costs. 

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