Taiwan Central Bank Seen on Hold Before December Rate Hike

DBS Group Research predicts that Taiwan's central bank will keep its policy rate unchanged on September 17, before raising it to 2.125% in December.

The analysts, Taimur Baig and Chang Wei Liang, point out that the August Consumer Price Index (CPI) was subdued at 2.0% YoY, with core CPI easing marginally to 2.3%.

However, they anticipate a somewhat hawkish tone from the central bank due to concerns about supply-side inflation risks, higher wages, and recovering domestic consumption.

The analysts note that policymakers will likely highlight the risk of second-round inflationary pressures stemming from rising inflation expectations, higher wages, and a recovery in domestic consumption.