TAIPEI (Reuters) – Taiwan’s central bank is likely to maintain its policy interest rate this week and keep it steady through the first quarter of next year, due to concerns over inflation and fresh U.S. tariffs, according to economists in a Reuters poll on Monday.
Last December, the central bank left the benchmark discount rate at 2%, as expected, after raising it from 1.875% in March of the previous year, in anticipation of a rise in electricity prices.
At its next quarterly meeting on Thursday, it is expected to keep the rate steady, according to all 33 economists surveyed.
Economists who provided forecasts beyond this week predicted the bank will maintain its stance through the first quarter of 2026.
Taiwan’s tech-centred, export-dependent economy has been supported by demand from the artificial intelligence (AI) boom, which has driven orders for companies such as TSMC, the world’s largest contract chipmaker.
The economy is expected to expand more than 3% this year due to the AI boom, though it will slow from last year’s growth of 4.59%.
Taiwanese policy makers have warned of the impact to the trade-dependent economy posed by tariffs threatened by U.S. President Donald Trump.
“Although future electricity price increases may push up inflation, uncertainties in external markets, particularly U.S. tariffs, are expected to keep the central bank cautious,” said Oxford Econ.
On inflation, Taiwan’s consumer price index (CPI) rose by a lower-than-forecast 1.58% in February. The central bank, which considers 2% its “warning” line, has made easing inflation a priority.
The U.S. Federal Reserve is expected to hold interest rates steady at its meeting this week.
The Taiwan central bank will also announce its revised economic growth and inflation forecasts for this year on Thursday.
(Poll compiled by Susobhan Sarkar; Reporting by Ben Blanchard, Faith Hung and Loh Liang-sa; Editing by Sherry Jacob-Phillips)
