According to Reuters, Taiwan’s central bank is likely to announce another mild rate hike

TAIPEI (Reuters) – Taiwan’s central bank is expected to raise its policy rate again this week at the same pace as before, but may keep the rate steady next year as exports and inflation slow, according to economists polled by Reuters. Economy.

The central bank is likely to raise the benchmark discount rate by 12.5 basis points to 1.75% at its quarterly meeting on Thursday, according to the average forecast of 23 economists surveyed. In the last September meeting, the bank also hiked by 12.5 basis points to 1.625%.

One economist surveyed expected the central bank to remain on hold.

Looking ahead, the median forecast of those polled calls for the Fed to keep rates at 1.75% through 2023.

The central bank has repeatedly said it will tighten monetary policy this year, in line with fiscal policy elsewhere, as inflation remains a key issue.

Taking questions from lawmakers on Monday, central bank governor Yang Hsin-long said the focus of this week’s meeting would be “relatively simple” — the domestic impact on inflation and what happens to global economic growth.

Taiwan’s inflation, while not as bad as it has been in the US and Europe recently, has been slowing since August.

Its consumer price index was 2.35% higher than a year earlier in November, the lowest inflation in nine months.

Woods Chen, head of macroeconomics at Yuanta Securities Investment Consulting in Taipei, said with inflation still above 2%, the central bank could move for another rate hike.

“I doubt there will be anything next year to stop a rate hike,” Chen said.

Yang told lawmakers the central bank was “confident” in keeping inflation below 2%.

Taiwan is a major semiconductor producer, making chips used in everything from cars and iPhones to supercomputers.

Exports last month fell at their fastest pace in nearly seven years, and the government has made gloomy predictions about the future.

Although the economy grew 6.45% last year, the fastest rate since a 10.25% expansion in 2010, it is expected to grow more slowly this year due to the impact of the COVID-19 lockdowns, global inflation woes and war in China. Ukraine.

Taiwan’s statistics agency last month cut its GDP forecast for 2022 to 3.06% from August’s forecast of 3.76%. It cut its outlook for exports for the year and said a deal would be reached in 2023.

Last week, Fitch Ratings forecast Taiwan’s growth to slow from 3.2% this year to 2.1% in 2023, largely due to weaker external demand.

The central bank will release its revised forecast for economic growth in 2022 on Thursday. For September, it forecast an expansion of 3.51%, down from the previous estimate of 3.75%.

It will also give its updated forecast for economic growth next year, forecasting 2.9% in September.

(Polling compiled by Anand Chandak and Carol Lee; Reporting by Liang-Cha Lo and Ben Blanchard; Editing by Bradley Perrett)