Central Bank leaves rates unchanged in September

Latest bank decision: At its meeting on 18 September, Taiwan’s Central Bank decided to keep the discount rate unchanged at 2.00%, where it’s been since early 2024.

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 below 2.0% on average so far this year and should remain mild going forward. Elevated uncertainty over U.S. trade policy was another reason to stay on hold.

No major deviations in monetary policy expected: The Central Bank did not provide specific forward guidance on the future direction of interest rates. Panelists are roughly split on the outlook for this year: Around half the panel sees rates on hold and the other half expects mild monetary easing. Next year, the majority anticipate small interest rate cuts in line with slowing economic growth.

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