The central bank is likely to leave interest rates unchanged in the upcoming quarterly policy-making meeting despite strong economic growth in the first quarter because the global economy remains haunted by debt problems in Europe, analysts said Wednesday. The central bank is scheduled to hold its quarterly director and supervisor meeting Thursday, when it will set its monetary policy and comment on the state of the economy at home and abroad. With the local economy battered by a global financial meltdown, the central bank has cut its discount rate seven times since September 2008, slashing 2.375 percentage points to a new low of 1.25 percent. Cheng Cheng-mount, chief economist at Citibank in Taiwan, said that while the improving local economy provides the central bank with a chance to hike interest rates, debt problems in Europe have added uncertainty to the global economy and are expected to prompt the central bank to give rate hikes a second thought. Cheng said that as local consumer prices remain tame with low inflation risk, it is unlikely the central bank will raise interest rates anytime soon. In the first quarter of this year, Taiwan's gross domestic product (GDP) grew 13.27 percent, marking the strongest performance since the third quarter of 1978. The government has raised its forecast for 2010 GDP growth to 6.14 percent from the previous 4.72 percent. Cheng said he expects that the U.S. Federal Reserve will raise interest rates by 0.25 percentage points in the first quarter of next year at the earliest, and that Taiwan will follow suit. Previously, Cheng had predicted the earliest possible central bank interest rate hike in the third quarter of this year. Tony Phoo, an economist with Standard Chartered Bank in Taiwan, agreed, saying the central bank fears that any immediate interest rate hikes will interrupt the pace of local economic recovery. Phoo said that although Taiwan scored double digit GDP growth in the first quarter of this year, the local jobless rate remains high, adding that because the economic growth for the second half of this year will be moderate, it is unlikely the central bank will boost interest rates now. Qu Hongbin, chief China economist with HSBC, said that with inflation not a concern, the central bank is expected to keep key interest rates the same in Thursday's meeting. Qu said that because Taiwan has enjoyed strong export growth on rising global demand, HSBC is likely to raise its forecast for the island's 2010 GDP growth. In April, HSBC forecast Taiwan's economy would grow 6.4 percent in 2010. 