Taiwan’s Central Bank Expected to Maintain Rates, Eyes Future Cuts

Despite inflation concerns, Taiwan’s central bank may keep its policy interest rate at 1.875% during its quarterly meeting this Thursday, March 21. 

Economists in a Reuters poll anticipate this decision amidst rising consumer prices, with a possible rate cut projected only from the second quarter of 2025.

Central Bank Governor Yang Chin-Long recently highlighted the unlikely chance of rate cuts before June, given the inflationary pressures that might prompt a revision of the 2024 inflation forecast. 

February saw Taiwan’s consumer price index jump to 3.08%, a 19-month high, driven by increased food prices during the Lunar New Year and anticipated electricity price hikes in April.

After pausing rate increases last June following a total of 75 basis points rise since March 2022 to tackle inflation, the Central Bank now faces the challenge of balancing economic growth against inflation concerns.

Despite this, the Central Bank remains optimistic. 

In December, it raised its GDP growth forecast for 2024 slightly to 3.12%, aiming to navigate the complexities of soft tech demand and global inflation affecting Taiwan’s major semiconductor production.

For more information, read the full article at Reuters.