By Jeanny Kao and Faith Hung
TAIPEI, Dec 26 (Reuters) - Taiwan's central bank left its policy rate unchanged for the 10th straight quarter on Thursday, as expected, to support the economy as export momentum slows but inflation stays mild.
Price pressures will be tame next year, with the central bank expecting the consumer price index to rise 1.21 percent. That will give it some leeway to implement tightening measures if needed when the Federal Reserve tapers stimulus next year.
Taiwan's export-dependent economy is facing headwinds as growth slows in its biggest export market, China, hitting demand for the technology parts and products it manufactures.
The central bank left its benchmark rate at 1.875 percent, saying it expects the global economy to see stable growth which will help the island's growth in 2014 exceed this year's rate.
'Taiwan's exports are expected to improve next year with global economies recovering...however, investment momentum for most industries remain not sufficient,' the central bank said in a statement.
All 11 economists polled by Reuters had predicted the central bank would keep interest rates unchanged.
Taiwan's exports posted no growth in November, constrained by weak demand in key markets ahead of the Christmas season that will likely drag on growth in the final quarter of the year.
'There's no room to increase rates as the real interest rate is still positive. We have to wait till the real interest rate turns negative, which we forecast may happen in Q3,' said Yuanta Securities analyst Aidan Wang.
The government cut its full-year growth outlook in late November, the second time it did so in three months, reflecting weak prospects for the island's pivotal high-tech goods.
The Federal Reserve said earlier this month it would pare its monthly purchases of Treasuries and mortgage-backed securities in January by $10 billion to $75 billion.
(Additional reporting by Michael Gold and Clare Jim; Editing by Jacqueline Wong) Keywords: TAIWAN ECONOMY/RATES
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