APAC Economic Perspectives "Taiwan: steady policy rate, further growth u..."

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APAC Economic Perspectives "Taiwan: steady policy rate, further growth u..."

Global Research

18 June 2026ab

APAC Economic Perspectives Economics

KoreaTaiwan: steady policy rate, further growth

upgrade William Deng

Economist

william-w.deng@ubs.com

+852-2971 6765

CBC on hold Ally Chen

Taiwan’s CBC kept policy interest rates unchanged at the 2Q monetary policy committee Analyst

meeting on June 18th. The three key policy rates—the discount rate, refinancing rate, ally.chen@ubs.com

+886-2-8722 7347

and the rate on temporary accommodation—remain at 2.00%, 2.375%, and 4.25%,

respectively, for the ninth consecutive policy meeting. The decision on policy rates was Randy Abrams

made unanimously. The CBC has also decided to keep other policy parameters, such as Analyst

the reserve requirement ratio and real estate-related lending policies, unchanged. randy.abrams@ubs.com

+886-2-8722 7338

Effective inflation control, manageable upside Risk

Headline CPI inflation broke above 2% to 2.2% year-over-year in May, compared to

1.2% in February and March. The jump in energy inflation, due to the shock from the

Strait of Hormuz, was the key driver behind the acceleration (Figure 4). In our

assessment, the increase in CPI has been rather mild and much more modest compared

to other Asian peers, considering the unprecedented oil shock (Figure 5). This reflects

the effectiveness of the government’s inflation smoothing measures. The CBC revised its

full-year inflation projection up to 1.91% (from 1.80%), which is largely in line with our

projection of 1.9%, and considers the inflation outlook as “still moderate.” Looking

ahead, we see inflation risks as manageable.

Continuing growth momentum

The manufacturing PMI survey improved consecutively in April and May after the initial