Taiwan leaves interest rates unchanged, raises GDP forecast

TAIPEI: Taiwan’s central bank held its policy interest rate unchanged while raising its growth estimate for the year on Thursday (Sep 19), asserting the need for vigilant monetary policy even as inflation gradually eases but remains a lingering concern.
The central bank left the benchmark discount rate at 2 per cent, where it has been since March, in an unanimous decision at a quarterly board meeting.
All 32 economists in a Reuters poll had predicted the central bank would keep the rate unchanged.
The central bank has chosen to chart its own path and not to follow the lead of the US Federal Reserve, which on Wednesday delivered a larger-than-usual half-percentage-point reduction.
Taiwan’s central bank raised its 2024 estimate for economic growth to 3.82 per cent from a forecast of 3.77 per cent in June, and predicted growth of 3.08 per cent in 2025. Taiwan’s economy grew at its slowest pace in 14 years in 2023.
The island’s tech-focused economy, home to the world’s largest chipmaker TSMC, has powered ahead thanks to demand from companies like Nvidia for artificial intelligence applications.
The central bank also slightly lifted its consumer price index (CPI) forecast for this year to 2.16 per cent from a previous prediction of 2.12 per cent, forecasting it would fall to 1.89 per cent next year.
In a measure aimed at curbing property price increases, the central bank also raised the ratios it sets for banks’ reserve requirements by 25 basis points.