Taiwan Leaves Key Rate Unchanged

The Central Bank of the Republic of China, Taiwan’s monetary authority, kept its benchmark interest rate unchanged at 2% at its September 2026 meeting, holding borrowing costs at their highest level since 2008. Headline inflation remained above the central bank’s 2% target for a fourth consecutive month, although it eased to 2.04% in August, reflecting the impact of higher international oil prices. Meanwhile, economic growth remained resilient, with the economy recording its fastest first-half growth since 1976, fueled by the AI boom and strong export growth, particularly in semiconductors. Forecasts for economic growth were raised to 9.09% for the second half of 2026 and 11.48% for the full year, as demand for emerging technologies is expected to remain strong. The inflation forecast was also raised to 2.03%, before easing to 1.83% in 2027 as the surge in oil prices subsides.

The Central Bank of the Republic of China, Taiwan's monetary authority, maintained its benchmark interest rate unchanged at 2% in its June 2026 decision, as expected by the large majority of the market, to hold borrowing costs at their since 2008 for the ninth straight quarter. The decision contrasted with monetary authorities across Asia, which have commenced their hiking cycles as higher energy prices from the war in Iran exacerbated inflationary pressures. Inflation in Taiwan rose past 2% for the first time in one year in May, crossing the alert threshold for the central bank. This was combined with soaring growth in the economic area amid the global boom for high-end semiconductors and AI infrastructure products, driving the country to revised export growth this year upwards to 40%.

Taiwan's central bank kept its key discount rate unchanged at 2% during its March 2026 policy meeting, in line with market expectations and continuing a pause that has been in place since March 2024. Taiwan’s economy remained robust, with GDP rising 12.65% year-on-year in Q4 2025, marking the fastest growth since Q3 1987, driven by strong external demand in emerging technologies such as AI. Meanwhile, the annual inflation rate climbed to 1.75% in February 2026 from a five-year low of 0.69% in the previous month, marking its highest reading since April 2025. The significant upturn was driven in part by Lunar New Year holiday effects and rising global commodity prices amid Middle East tensions. The bank revised its 2026 annual CPI and core CPI forecasts to 1.80% and 1.75%, respectively. Nevertheless, the bank emphasized that it will closely monitor geopolitical risks, US trade policies, monetary policy moves by major economies, developments in the AI sector, and extreme weather events.