No Rate Hike Before H210

Consumer price inflation came in at -0.8% y-o-y and -0.6% m-o-m in September, underscoring the deflationary threat facing Taiwan. We maintain our 0.8% end-2009 target as base effects should see the rate jump over the coming months. Our 2.0% forecast for 2010 remains in place but faces downside risks, and we see an interest rate hike before H210 as unlikely.

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