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Taiwan Monetary Policy June 2023

Taiwan: Central Bank keeps rates unchanged in June

At its monetary policy meeting on 15 June, the Board of Directors of Taiwan’s Central Bank (CBC) left the policy rate at 1.875%, after hikes at the five previous policy meetings.

The decision to end the hiking cycle was driven by inflation which has trended down steadily so far this year, and is now low by regional and global standards. The CBC expects a further moderation in price pressures later this year. In addition, economic activity has been weaker than expected so far this year; with its decision to pause, the Bank likely had one eye on supporting the economy.

Looking ahead, the CBC’s forward guidance was open-ended. Most of our panelists see the policy rate unchanged through year-end, although a few panelists see the Bank lowering rates in H2.

On the outlook, United Overseas Bank’s Ho Woei Chen said:

“We think this is the start of an extended rate pause as the CBC contemplates more prolonged period of inflation that is above trend as well as the downside growth risks. Our forecast for the discount rate remains at 1.875% through at least 1H24.”

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