Money in Taiwan
Taiwan - Money
Central Bank hikes rates again in June
At its monetary policy meeting on 16 June, the Board of Directors of Taiwan’s Central Bank (CBC) increased the policy rate from 1.375% to 1.50%. All of our panelists expected the Bank to hike, although a small majority expected slightly more aggressive tightening than the 12.5 basis point increase announced. The CBC also increased the reserve requirement ratio by 25 basis points.
The key justification for the move was the desire to get a grip on inflation, which is currently running at a near-decade high due to elevated import costs, and unfavorable weather conditions at home restricting the supply of fruit and vegetables. In light of recent developments, the CBC revised up its 2022 forecasts for inflation and core inflation markedly, to 2.8% and 2.4% respectively. Moreover, the Central Bank remained fairly upbeat on the outlook for GDP, thanks to the strength of the high-tech sector and an expected recovery in consumption once the current Covid-19 wave subsides, providing the leeway to keep hiking.
Looking ahead, further rate hikes are expected later this year as the Bank looks to dampen price pressures.
On the Bank’s latest move and the outlook, Iris Pang, economist at ING, said:
“Looking at Taiwan's CPI inflation rate in relation to other major economies, Taiwan's rate is moderate at 3.39% year-on-year in May, while the U.S., UK, and eurozone CPI inflation rates range between 8% and 9%. This also explains the smaller hike by Taiwan's central bank. […] We believe a slower rate hike path is more appropriate for Taiwan, and we expect two more 12.5 basis point hikes in H2 2022 which should balance the risk of higher inflation and the uncertainty faced by the semiconductor sector.”
FocusEconomics panelists see the policy rate ending 2022 at 1.78% and 2023 at 2.05%.
Taiwan - Money Data
|Money (annual variation in %)||5.8||3.6||3.6||2.7||4.5|
5 years of economic forecasts for more than 30 economic indicators.
Taiwan Money Chart
Source: Central Bank of China and FocusEconomics calculations.
|Bond Yield||0.69||1.28 %||Dec 31|
|Exchange Rate||29.91||0.07 %||Jan 01|
Get a sample report showing our regional, country and commodities data and analysis.
Request a Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
August 18, 2022
The near-term economic impact should be limited. Longer-term risks are significant due to the potential for further sanctions, shipping disruptions and war. What happened: From 4 August, China launched a series of military drills close to Taiwan, in response to Nancy Pelosi—the Speaker of the U.S. House of Representatives—visiting Taiwan earlier in the month.
August 12, 2022
GDP growth dipped to 3.0% year on year in the second quarter from 3.7% in Q1, marking the slowest increase since Q2 2020 and slightly undershooting market expectations.
August 8, 2022
Merchandise exports rose 14.2% on an annual basis in July (June: +15.2% year-on-year) amid higher exports of electronics, machinery and mineral products.
August 5, 2022
Consumer prices fell 0.03% from the previous month in July, swinging from June's 0.38% rise.
August 1, 2022
The S&P Global Manufacturing Purchasing Managers' Index (PMI) declined from 49.8 in June to 44.6 in July.