Taiwan: CBC on hold as expected: Base case still on hold, though 4Q hike risk rising

研报英文原文证据摘录

Taiwan: CBC on hold as expected: Base case still on hold, though 4Q hike risk rising

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Despite the energy shock, some of the weaker links seen over the past year are also firming.

Export strength has broadened into non-tech, consistent with the global capex expansion

broadening from tech to non-tech. Domestic demand is improving as retail sales accelerated

into April on equity-wealth effects, better non-tech wage growth, and residual support from

last year’s cash handouts.

Despite the CBC's benign inflation outlook, the key question is whether inflation

expectations will begin to firm. We see CPI averaging 2.0%y/y for the full-year, likely

slightly above 2%oya in coming months. The reopening of the Strait of Hormuz and a

potential pullback in oil prices skew risks to the downside, but several weeks will be needed

to clear backlogs, and repairs to regional energy facilities and infrastructure will take longer

to fully offset the earlier supply shortfall. A hawkish tilt abroad, including at the Fed, could

add pressure on the CBC. Rather than moving pre-emptively, however, the CBC appears

more comfortable maintaining a wait-and-see stance. We continue to expect the CBC to

remain on hold this year, though the risk of a 4Q hike is rising, especially if the Fed tilts more

hawkish over the next few meetings and domestic inflation expectations firm significantly

as the recovery in non-tech activity and private consumption gains further momentum.

The CBC also signaled continuity rather than new tightening on the property sector: keep

existing selective mortgage curbs and maintain scrutiny via risk‑based pricing and fund‑use

checks, while shifting total real‑estate loan exposure control to banks’ internal limits with

mandatory monthly reporting and ongoing targeted exams.