Taiwan’s central bank has maintained its benchmark interest rates for a tenth consecutive quarter, while revising upward its economic growth and inflation forecasts for 2026. The Central Bank of the Republic of China (Taiwan) announced that it would keep the policy discount rate steady at 2%, alongside secured and unsecured lending rates at 2.375% and 4.25%, respectively.
The central bank raised its gross domestic product (GDP) growth forecast for 2026 to 11.48% from a previous estimate of 9.45%, attributing the stronger outlook to stable domestic economic conditions. Inflation projections were also adjusted higher, with the bank now expecting consumer price growth of 2.03% for 2026, up from 1.91%. Despite this increase, the central bank anticipates inflation to moderate to 1.83% in 2027.
The decision to hold rates steady came amid mixed expectations among economists, with a Wall Street Journal poll showing nearly equal division between those predicting a rate hike and those forecasting a hold. The central bank cited multiple factors influencing its move, including ongoing uncertainty surrounding the Middle East conflict and its potential effects on global prices and economic growth.
Consumer inflation in Taiwan has surpassed the central bank’s 2% warning threshold for four consecutive months. However, strong economic expansion driven by rapid growth in artificial intelligence industries has afforded the bank the flexibility to delay interest rate increases. This contrasts with many other central banks that have raised rates in response to geopolitical tensions and inflationary pressures following the outbreak of conflict in Iran.
Analysts from Capital Economics described the central bank’s stance as “fairly sanguine” regarding inflation risks. Although the bank raised its inflation forecast, it maintains an expectation that prices will begin to ease next year. Looking forward, Taiwan’s central bank indicated it will closely monitor developments in domestic inflation, monetary policies abroad, domestic financial market conditions, and other uncertainties that could affect the economy.
By keeping borrowing costs steady, policymakers aim to support the continued stable growth of Taiwan’s economy and financial system amid a complex global environment.