Taiwan Central Bank Minutes Highlight Concerns About Rising Inflation, According to Reuters

TAIPEI (Reuters) – Taiwan’s central bank has expressed apprehension about rising inflation and indicated the possibility of additional interest rate hikes if inflation continues to be a concern, as outlined in the minutes from its latest board meeting.

During its quarterly meeting in September, the central bank unanimously decided to maintain its policy rate at 1.875%. The bank also emphasized the need for a sustained tight monetary policy while closely monitoring inflation and revised its 2023 growth forecast for the export-driven economy downward.

One unidentified board member noted, “If inflation shows any hint of becoming unanchored by the next board meeting, the bank should take a stronger approach to curb inflation.” Another board member mentioned the necessity to “actively deal with possible inflation” within the quarter, though no further details were provided.

A third member highlighted that the bank may “timely adjust rates when needed” due to various uncertainties, including inflation and economic growth. Additionally, one board member suggested that high inflation might become a “new normality” in the future.

Taiwan’s economy experienced faster-than-expected growth in the third quarter, bolstered by domestic consumption, although exports remained weak due to declining global demand for the island’s high-tech products. The government anticipates a full-year growth rate of 1.61% for 2023, marking the slowest growth in eight years.

In comparison, Taiwan’s inflation has remained significantly milder than that of many economies in Europe and the United States.

At the September meeting, the bank adjusted its headline consumer price index (CPI) forecast for the year to 2.22%, down from a previous estimate of 2.24%, but projected it to decrease to below 2% in the following year.

The central bank’s next quarterly rate-setting meeting is scheduled for December 14.