TAIPEI (Reuters) – Taiwan's central bank is expected to keep interest rates unchanged this week and continue on the same path throughout next year in light of the strong economy while dealing with inflation concerns, according to a Reuters poll on Monday.
The central bank left the benchmark discount rate at 2% as expected at its last quarterly meeting in September, after raising it to that level from 1.875% at a meeting in March before electricity prices rose.
At its next quarterly meeting on Thursday, it is expected to hold interest rates steady again, according to all 33 economists surveyed.
Economists answering questions about the outlook after this week expected the bank to continue holding steady throughout 2025.
Taiwan's technology-focused, export-driven economy is booming on demand from an artificial intelligence (AI) boom that has prompted orders for the likes of TSMC, the world's largest contract chip maker.
Its economy is expected to grow by more than 4% this year thanks to the artificial intelligence boom, but growth may slow slightly to 3.3% next year, the statistics office said last month.
Taiwan's Consumer Price Index (CPI) in November rose by a higher-than-expected 2.08%, and the central bank, which considers 2% a warning line, has made lowering it a priority.
Given inflation in Taiwan, staying flat is the most likely outcome this week, said Hsu Chieh-yen of MasterLink Securities.
“Inflation is felt, but it's not that terrible,” Hsu said. “Even with the Fed still expected to cut interest rates in the first half of next year, Taiwan's central bank will not act.”
The US Federal Reserve is expected to cut by a quarter of a percentage point at its meeting on December 17-18.
Taiwan's central bank will announce its revised forecasts for economic growth and inflation for this year and next on Thursday.
(Survey compiled by Anant Chandak and Susubhan Sarkar; Reporting by Ben Blanchard and Liang Sa Loh; Editing by Mrijank Dhaniwala)
