Taiwan central bank raises benchmark rate in surprise move

TAIWAN’S central bank surprised markets by raising its policy rate on Thursday (Mar 21), and also lifted its inflation forecast for the year as inflationary pressures persist.

The central bank hiked the benchmark discount rate to 2 per cent from 1.875 per cent, where it has stood since last March.

In a Reuters poll, 25 out of 26 economists had predicted the central bank would keep the rate unchanged.

The move follows the US Federal Reserve’s decision on Wednesday to leave rates on hold though it indicated it would stick with plans to cut borrowing costs this year.

Taiwan’s central bank raised its 2024 estimate for economic growth to 3.22 per cent from a forecast of 3.12 per cent in December.

The central bank also increased its consumer price index (CPI) forecast for this year to 2.16 per cent from a previous prediction of 1.89 per cent.

Taiwan’s CPI rose 3.08 per cent in February, a 19-month high, as food prices climbed during the Chinese New Year holiday. REUTERS