TAIPEI (Taiwan News) — Taiwan’s Central Bank is widely expected to leave interest rates unchanged this week, although rising inflation remains a growing concern, Reuters reported Monday.
A Reuters survey found that 27 of 30 economists expect the Central Bank to leave its benchmark discount rate at 2% when policymakers meet Thursday. The remaining three forecast a 12.5-basis-point increase to 2.13%.
Most economists surveyed expect rates to remain unchanged through the end of 2027. The Central Bank last raised rates in March 2024, when it increased the benchmark rate by 12.5 basis points in anticipation of higher electricity prices.
Taiwan’s export-driven economy has benefited from strong AI-related demand, particularly for semiconductors and servers. Government forecasts released last month projected economic growth of 9.64% this year, following 8.68% growth last year.
Inflation, however, remains a concern. Consumer prices rose 2.2% in May from a year earlier, exceeding the Central Bank’s 2% warning threshold and reaching their highest level in more than a year.
Cathay United Bank chief economist Lin Chi-chao (林啟超) said prolonged disruptions to shipping through the Strait of Hormuz could push up energy costs and increase pressure on the Central Bank to raise rates in the second half of the year, per Reuters. He said policymakers may adopt a more hawkish tone if higher fuel prices continue to drive inflation.
The Central Bank is also expected to release updated forecasts for economic growth and inflation when it concludes its quarterly policy meeting Thursday.
