Taiwan central bank unexpectedly raises rates, cuts GDP forecast

TAIWAN’S central bank raised its policy rate on Thursday (Mar 23) in a surprise move reflecting continued concerns about inflation despite recent turmoil on global financial markets, and cut its outlook for the island’s economic growth this year.

The central bank, in a unanimous decision, raised the benchmark discount rate by 12.5 basis points (bps) to 1.875 per cent.

Economists in a Reuters poll had mostly expected the central bank to stand pat, though eight of the 24 economists surveyed expected the central bank would lift the rate to 1.875 per cent.

The decision came after the US Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs after the recent collapse of two US banks.

Taiwan’s central bank again cut its 2023 estimate for economic growth to 2.21 per cent from its previous forecast of 2.53 per cent in December.

It also raised its consumer price index forecast for this year to 2.09 per cent from a previous prediction of 1.88 per cent. REUTERS