Central bank leaves interest rates unchanged for 7th straight quarter

Taipei, Dec. 18 (CNA) The Central Bank of the Republic of China (Taiwan) on Thursday decided to leave its key interest rates unchanged after wrapping up a quarterly policymaking meeting.

The market had widely anticipated the central bank would leave interest rates unchanged for the seventh consecutive quarter, even after the U.S. Federal Reserve cut rates for the third straight policymaking meeting last week.

After Thursday's decision, Taiwan's discount rate will stay at 2 percent, still the highest level in 15 years, with the rate on accommodations with collateral at 2.375 percent and the rate on accommodations without collateral at 4.250 percent.

Economists, including Cathay United Bank chief economist Lin Chi-chao (林啟超), have argued it is currently difficult for the central bank to follow the Fed's lead and cut interest rates as the local economy remains strong and inflation stable.

According to an estimate from the Directorate General of Budget, Accounting and Statistics (DGBAS), Taiwan's export-oriented economy will grow 7.37 percent in 2025, an upgrade of 2.92 percentage points from the previous forecast, after a stunning increase of 8.21 percent in the third quarter of the year on the back of strong global demand for artificial intelligence applications.

In addition, the DGBAS forecast Taiwan's consumer price index will grow 1.67 percent, below the 2 percent alert level set by the central bank.

Economists said the central bank could even maintain the current rates into the first half of 2026 while observing how the global economy evolves.

Moreover, the central bank's priority for now is to watch closely how the Taiwan dollar moves against the U.S. dollar as the local currency, buoyed by relatively strong economic growth, could face upward pressure and volatility at a time when the Fed continues its rate cut cycle, they added.

(Pan Tzu-yu and Frances Huang)Enditem/AW