Taiwan: Central Bank leaves rates unchanged in March
Latest bank decision: At its meeting on 20 March, Taiwan’s Central Bank decided to keep the discount rate unchanged at 2.00%.
Monetary policy drivers: Rate cuts were not warranted, given that the economy is performing well as the export sector rides the global AI boom. On the flipside, rate hikes were unnecessary given that inflation has been moderate at close to 2.0% in recent months, and should remain close to that level in 2025 as a whole according to the Bank.
No major deviations in monetary policy expected: The Central Bank did not provide specific forward guidance on the future direction of interest rates. The Consensus among our analysts is for interest rates to end this year close to their current level. Most panelists see rates on hold, some see cuts and one sees a hike.
Panelist insight: United Overseas Bank’s Ho Woei Chen said:
“Despite the positive economic prognosis, the second order effects from the trade war due to a global growth slowdown could eventually have a larger impact on Taiwan’s export-oriented economy. The CBC may bring forward its rate cut if the rebound in domestic inflation due to the electricity price hike in Apr turns out to be milder than expected. Other than inflation, the correction in the property market will also be a focus for the CBC. For now, we maintain our forecast for the CBC to stay on hold at 2.0% for the rest of 2025.”