DBS Group Research expects Taiwan’s central bank to keep its policy rate unchanged on September 17, before raising it to 2.125% in December. Analysts Taimur Baig and Chang Wei Liang highlight subdued August CPI, but anticipate a somewhat hawkish tone as the CBC remains vigilant on supply‑side inflation risks, higher wages and recovering domestic consumption.

CBC to stay vigilant on inflation risks

“We expect the central bank to keep its policy rate unchanged at the September 17 policy meeting, before hiking rates to 2.125% at the next meeting in December.”

“That said, we expect the CBC to retain a somewhat hawkish tone.”

“The central bank is likely to remain vigilant about the risk of persistent supply-side inflation, particularly given the renewed rise in global oil prices amid prolonged tensions in the Middle East.”

“Policymakers are also likely to highlight the risk of second-round inflationary pressures stemming from a potential rise in inflation expectations, higher wages, and a recovery in domestic consumption.”

“August CPI data suggest little urgency for the CBC to hike rates: headline CPI came in slightly below expectations at 2.0% YoY, while core CPI eased marginally to 2.3%.”