Taiwan's Central Bank has decided to keep its key interest rates unchanged, opting not to follow the trend of easing monetary policy seen in the United States and across various Asian countries. This decision reflects the bank's cautious approach towards inflation and its commitment to maintaining economic stability.
On Thursday, the Central Bank of the Republic of China (Taiwan) announced that it would hold its benchmark discount rate steady at 2.000%. This move was in line with the expectations of analysts surveyed by The Wall Street Journal. Additionally, the bank maintained its secured loan rate at 2.375% and its unsecured loan rate at 4.250%.
The bank's decision is primarily driven by a gradual decrease in domestic inflation rates and the ongoing global economic conditions. This approach contrasts with the recent actions of other central banks, which have begun to relax their monetary policies in response to varying economic pressures.
This comes after the US Federal Reserve has reduced its benchmark interest rate by 50 basis points, bringing it down to a range of 4.75% to 5%. This is the first rate cut in four years, signaling the start of a new easing cycle. The Federal Reserve had kept its policy rate between 5.25% and 5.50% since July 2023 due to rising inflation, which reached a 40-year high. However, inflation is now nearing the central bank's target, prompting the decision to lower rates.
This decision follows the Central Bank's previous meeting in June, where it also chose to keep rates unchanged after implementing an unexpected rate hike of 12.5 basis points in March. This increase was aimed at mitigating inflation risks and stabilizing the economy.
Since that rate hike, Taiwan's economy has continued to grow, although there are still areas of persistent price pressures. Analysts suggest that these economic conditions will likely discourage the Central Bank from making abrupt policy changes, even as other global central banks shift towards more accommodative measures.
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