Taiwan central bank raises growth forecast, keeps rates unchanged

Taiwan's central bank on Thursday raised its economic growth forecast for the year due to booming exports while keeping its benchmark interest rate unchanged, as expected. Taiwan's role as a major producer of advanced semiconductors powering the artificial intelligence boom for companies like Nvidia has fuelled its economy this year. The central bank left the benchmark discount rate unchanged at 2% at a quarterly meeting, in a unanimous decision that was in line with predictions from a Reuters poll in which all 30 economists forecast no change. It raised its 2025 estimate for economic growth to 7.31% from a previous forecast of 4.55% provided in September. For next year, it expects growth to slow to 3.67%, though that is better than a previous prediction of 2.68%. In a statement, the bank said it would closely monitor developments in U.S. tariffs as well as geopolitical risks. Taiwan's economy grew 4.59% in 2024, buoyed by robust exports, including high demand for AI applications. Goods from Taiwan are subject to a 20% U.S. tariff, as part of President Donald Trump's sweeping measures targeting imports from across the globe, though Taipei remains in talks with Washington to get a better deal. Semiconductors have thus far been excluded from the tariffs. The central bank trimmed its consumer price index forecast for this year to 1.66% from its September forecast of 1.75%. For next year, it said it expected inflation to slow further to 1.63%. Taiwan's rate decision came after a sharply divided U.S. Federal Reserve cut interest rates last week, but signalled borrowing costs were unlikely to drop further in the near term.

-Liang-sa Loh and Faith Hung