Taiwan: Central Bank holds policy stable in March amid improving economic backdrop
March 18, 2021
At its monetary policy meeting on 18 March, the Board of Directors of Taiwan’s Central Bank kept rates unchanged, with the discount rate set at the record low of 1.125%.
The Bank’s decision was underpinned on one hand by a strong economy, amid surging foreign demand for Taiwanese goods and encouraging signs regarding domestic demand, which meant that further stimulus was not warranted. However, given price pressures are still muted and there is still some uncertainty surrounding the global economic outlook, the Bank judged it was also premature to begin reducing monetary stimulus.
In its communiqué, the Bank adopted a neutral tone, and did not give explicit forward guidance on the future direction of rates. Given the economy is performing well, our panelists do not see further rate cuts ahead, although most see rates remaining at their current level until 2023 in order to solidify price pressures.
Author: Oliver Reynolds, Economist