Taiwan Central Bank Leaves Key Interest Rates Unchanged — Update

By Sherry Qin

Taiwan's central bank kept interest rates unchanged for a ninth consecutive quarter, citing expectations that inflation pressures will remain moderate following the interim U.S.-Iran peace deal.

Despite holding rates steady, the Central Bank of the Republic of China (Taiwan) maintained a slightly hawkish stance, saying Thursday that it will continue to monitor developments in the Middle East and monetary-policy trends in major economies.

Policymakers left the benchmark discount rate at 2.000%, in line with the forecasts of most economists surveyed by The Wall Street Journal. The secured and unsecured lending rates were also unchanged at 2.375% and 4.250%, respectively.

Taiwan has benefited from its central role in the artificial-intelligence supply chain, helping it drive gross domestic product growth to 14.55% in the first quarter, the strongest pace in nearly four decades.

Growing adoption of agentic AI and an accelerated buildout of AI infrastructure have boosted demand for advanced chips and servers produced by Taiwanese companies such as TSMC and Foxconn.

Consumer-price inflation rose above the closely watched 2% threshold in May for the first time in a year, driven by higher energy costs.

However, following the interim peace agreement between the U.S. and Iran and the expected reopening of the Strait of Hormuz--a critical shipping route through which roughly one-fifth of the world's oil typically passes--Taiwan's energy supply conditions could gradually stabilize.

The central bank said it still expects inflation pressures to remain moderate and economic growth to stay robust. It raised forecasts for 2026 inflation to 1.91% from 1.8% and GDP growth to 9.45%, which would surpass the previous 15-year high reached in 2025.

The decision comes amid a series of central-bank meetings highlighting how poicymakers are responding to the twin risks of slowing growth and higher inflation linked to the conflict in the Middle East.

On Wednesday, the Federal Reserve left its benchmark rate unchanged at its first policy meeting under Chairman Kevin Warsh. Earlier this week, Australia's central bank also stood pat, pausing after three consecutive rate increases. The Philippine central bank on Thursday continued tightening policy to combat persistent inflationary pressures, while Bank Indonesia raised interest rates again following a recent off-cycle increase.

The Taiwanese central bank offered few clues about its next move, saying only that it would adjust policy as needed. Given subdued inflation pressures and solid economic growth, Capital Economics expects the CBC to keep interest rates unchanged for the foreseeable future, economist Jason Tuvey said.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

June 18, 2026 05:57 ET (09:57 GMT)