Taiwan Interest Rate

Central Bank stands pat again in June

Bank opts for caution: At its meeting on 18 June, the Central Bank of the Republic of China (Taiwan) opted to keep the discount rate at 2.00%, where it has stood since March 2024. The hold had been penciled in by markets.

Balanced growth and inflation outlook drove the hold: The Central Bank held rates as the inflation outlook is set to remain moderate ahead, despite May’s rise above the Central Bank’s 2.0% threshold. Moreover, the Bank opted out of a cut given solid growth and export momentum. Instead, it adopted a cautious stance amid global uncertainty, oil-price risks and currency pressures.

Cautious approach likely to persist: The Central Bank offered no forward guidance, reinforcing its data-dependent stance. Most panelists expect rates to remain unchanged through year-end, as a moderate inflation outlook and strong growth provide little justification for policy shifts in either direction, although the rest see rates ending 2026 above current levels.

Panelist insight: On the 2026 monetary policy outlook, United Overseas Bank’s Ho Woei Chen said: “With oil prices easing and property market pressures moderating, the near-term case for a rate hike has likely weakened. Having said that, global uncertainty remains elevated, driven by Middle East developments, major central banks’ policy paths, US trade policy, and AI sector prospects. On balance, we maintain our forecast for CBC to keep its benchmark rate on hold through 2026.” In contrast, Nomura analysts said: “We maintain our view for two 12.5bp rate hikes (December 2026 and March 2027; terminal rate: 2.25%), underpinned by our view of a broad-based growth recovery, as well as rising and broadening inflationary pressures that could eventually push up inflation expectations and lead to the risk of second-round effects.”

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