TAIPEI (Reuters) -Taiwan’s central bank raised its policy rate on Thursday for the third time this year, reflecting continued concerns about inflation, even as it cut the economic growth forecast for 2022.
The central bank raised the benchmark discount rate by 12.5 basis points (bps) to 1.625%, as expected.
Economists in a Reuters poll had expected the central bank to raise the rate at its quarterly monetary policy meeting. The median expectation was for a 12.5 bps rise, but a minority forecast an increase of 25 bps and one saw a 50 bps hike.
The decision came after the U.S. Federal Reserve delivered its third straight 75-basis-point rate hike on Wednesday and signalled more rises at upcoming meetings, underscoring its resolve not to let up in its battle to contain inflation.
Taiwan’s central bank has repeatedly said it will tighten monetary policy this year, as its counterparts elsewhere are doing, and that it sees inflation as a key criteria for interest rate moves.
The central bank said it expected the consumer price index (CPI) would rise 2.95% in 2022, slightly revising up the outlook from 2.83% predicted in June.
But inflation, never as bad as in the United States or Europe, is easing.
Taiwan’s consumer price index was 2.66% higher in August than a year earlier, the lowest reading in half a year.
The trade-dependent economy is also beginning to lose momentum as consumer demand swoons in major markets China, the United States and Europe. Taiwan’s exports last month rose just 2% on-year and could get worse as the year progresses.
The central bank again cut its 2022 estimate for gross domestic product (GDP) growth to 3.51% from 3.75% seen in June. For 2023, it predicted GDP growing 2.9%. The economy grew 3.05% in the second quarter from a year earlier.
(Reporting by Liang-sa Loh and Yimou Lee; Editing by Ana Nicolaci da Costa)
