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.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Taiwanese interest rate projections for the next ten years from a panel of 18 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Taiwanese interest rate.

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