TAIPEI (Taiwan News) — Cathay Financial Holding raised its full-year growth forecast from 2.8% to 4.5% at a Monday press conference at National Taiwan University.

Cathay said AI trends have lifted exports beyond expectations, with strong momentum leading the Central Bank to keep rates unchanged in September. It added there will be no room for rate cuts this year, per CNA.

Hsu Chih-chiang (徐之強), a member of Cathay’s research team, said the AI boom outweighed uncertainty surrounding US President Trump’s tariffs, driving higher-than-expected export growth this year. He said private consumption remains a concern, with durable-goods spending showing almost zero growth.

Hsu said a NT$10,000 (US$330) government cash distribution could help support consumption in the fourth quarter. Looking to next year, he said the negative impact of tariffs will emerge — especially given this year’s higher base — and forecast Taiwan’s 2026 full-year growth would slow to 2%.

With international oil prices staying low and inflation pressures from food and rent easing, Cathay lowered its 2025 Consumer Price Index growth forecast from 1.9% to 1.8%. While inflation may continue normalizing next year amid utility-rate pressures and a cooling economy, the team estimates Taiwan’s inflation rate at 1.6% in 2026.

Hsu noted that attention is focused on interest-rate moves by the US Federal Reserve and Taiwan’s Central Bank. He said the Fed is expected to cut rates two to three times before year-end, and gave high probabilities for cuts in September, October, and December. If President Trump’s preferred candidate is appointed to the Fed next year, easing could continue.

As for Taiwan’s Central Bank, Hsu said it tends to act independently and may not follow the Fed’s pace. With growth expected to top 4% this year and inflation below 2%, he said there is limited room for cuts in 2025.

Hsu added that any rate cut would depend on next year’s economic conditions. Only if the economy posts two consecutive quarters of negative growth, alongside low inflation, might the Central Bank consider cutting.

On housing, he said any relaxation of mortgage controls would depend on banks’ concentration of real-estate loans. If that concentration falls, the Central Bank may consider easing its curbs.