Taiwan leaves interest rate unchanged, raises GDP forecast

TAIWAN’S central bank held its policy interest rate unchanged while raising its growth estimate for the year on Thursday (Sep 19). It also asserted the need for vigilant monetary policy as inflation remains a lingering concern.

The central bank left the benchmark discount rate at 2 per cent in a unanimous decision at a quarterly board meeting. The rate has remained at that level since March.

All 32 economists in a Reuters poll predicted the central bank would keep the rate unchanged.

The Taiwanese central bank has chosen to chart its own path instead of following the US Federal Reserve’s lead. The Fed 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. It also predicted growth of 3.08 per cent in 2025.

The Taiwanese economy grew at its slowest pace in 14 years in 2023.

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The central bank also slightly lifted its consumer price index 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.

To curb property price increases, it also raised the ratios for banks’ reserve requirements by 25 basis points. REUTERS