Central bank keeps rates unchanged for economic stability amid turmoil

Taipei, Sept. 17 (CNA) Taiwan's central bank on Thursday left its key interest rates unchanged for a 10th consecutive quarter, saying the decision was aimed at maintaining economic stability amid global uncertainty.

Taiwan's discount rate will remain at 2 percent -- its highest level in 15 years -- while the rate on collateralized accommodations will remain at 2.375 percent and the rate on non‑collateralized accommodations at 4.250 percent.

The decision diverged from that of the U.S. Federal Reserve, which on Wednesday local time raised its benchmark interest rate by a quarter percentage point to about 3.9 percent -- its first increase since 2023 -- in an effort to curb persistently high inflation.

The European Central Bank also raised its key rate last week, while Bank of Japan Governor Kazuo Ueda said earlier this month policymakers would consider a possible rate hike at upcoming meetings, with the next scheduled for Friday.

Explaining its decision, Taiwan's central bank said keeping policy rates unchanged would help maintain steady economic growth, particularly amid global uncertainties and the potential impact of conflicts in the Middle East on domestic prices and economic growth.

The bank said factors behind the decision included its assessment that domestic inflation remains manageable this year and is expected to fall below 2 percent next year, along with forecasts of steady economic growth.

The central bank raised its forecast for Taiwan's gross domestic product (GDP) growth this year to 11.48 percent from its June projection of 9.45 percent.

Taiwan's economy grew 14.15 percent in the first half of this year, exceeding expectations. Since July, exports have surged on strong demand for emerging technologies, while private investment and household consumption have continued to expand, it said.

The central bank also lifted its forecast for the consumer price index (CPI) this year to 2.03 percent from 1.91 percent in June, with inflation expected to ease to 1.83 percent next year.

The upward revision reflects high international oil prices and persistent service‑sector inflation. Next year, lower oil prices are expected to reduce fuel and airfare costs, while consumer demand is expected to remain moderate, according to the bank.

Meanwhile, the central bank said two changes to housing credit rules will take effect Friday: The borrowing limit for second‑home buyers will be raised to 70 percent of the property price from 60 percent, while land buyers will no longer be required to begin construction within a set period.

The bank said the changes were made because stricter housing credit rules over the past two years have reduced property lending, cooled speculation and improved banks' risk controls.