TAIPEI (Taiwan News) — Central Bank Governor Yang Chin-long (楊金龍) on Monday said that if the average international crude oil price rises to US$100 (NT$3,200) per barrel this year, Taiwan’s consumer price index (CPI) is expected to rise significantly.
Yang told legislators that the CPI forecast was revised to 1.8% primarily because the projected annual average oil price was raised from US$58.3 per barrel to US$85 per barrel, a 45% increase, per CNA. Most institutions now use US$85 in their estimates, but if the average price rises to US$100, the Central Bank preliminarily estimates CPI growth would reach about 1.9%.
He added that oil prices between US$95 and US$115 are considered temporary, and the Central Bank will continue to monitor developments and analyze scenarios as they evolve.
KMT legislators Lee Yen-hsiu (李彥秀) and Yen Kuan-heng (顏寬恒) asked whether the Central Bank would raise interest rates to counter inflationary pressure. Yang responded that the government has measures to stabilize oil prices, while the Central Bank’s two main responsibilities are to prevent imported inflation and ensure exchange rate stability, and to adopt a tightening monetary policy if prices continue to rise and inflation expectations form.
Lee followed up by asking if tightening includes raising interest rates, to which Yang replied, “Yes.” Regarding whether CPI growth could exceed 1.9%, he said the second quarter will be critical.
KMT Legislator Lin Te-fu (林德福) said that the Taiwan Institute of Economic Research projects 4.05% economic growth this year, while the Central Bank estimates 7.28%, highlighting discrepancies and uncertainty from Middle East developments. Yang explained that some institutions use more severe scenario analyses.
Yang added that if the conflict is short-term and does not affect US cloud service provider investments, Taiwan’s export momentum should remain similar to last year. Overall, the Central Bank maintains a cautiously optimistic view of Taiwan’s economic growth.
He also said the bank will closely monitor developments and collect data. The Central Bank’s board of directors meets quarterly in March, June, September, and December, with the next meeting in June, providing sufficient time to review data and make forecasts.
