DBS Group Research anticipates that Taiwan's central bank (CBC) will maintain its policy rate at the upcoming September 17 meeting, with a rate hike to 2.125% projected for December [1]. Analysts Taimur Baig and Chang Wei Liang from DBS cite subdued inflation data for August as a key reason for the expected pause, noting that headline CPI was slightly below expectations at 2.0% year-on-year, while core CPI eased marginally to 2.3% [1].
Despite the lack of immediate inflationary pressure, DBS expects the CBC to adopt a somewhat hawkish tone, remaining vigilant about persistent supply-side inflation risks. The analysts highlight concerns over the renewed rise in global oil prices, driven by ongoing tensions in the Middle East, as well as the potential for second-round inflationary effects from higher wages and a recovery in domestic consumption [1].
DBS suggests that while the current inflation data does not necessitate an urgent rate hike, policymakers are likely to emphasize the importance of monitoring inflation expectations and other risk factors in their communications [1]. No specific market reactions or analyst opinions beyond those of DBS were mentioned in the article [1].
CONCLUSION
DBS expects the CBC to keep rates unchanged in September, with a possible hike in December as inflation risks persist. The central bank is likely to maintain a cautious stance, focusing on supply-side pressures and domestic economic recovery. Market participants should monitor upcoming policy signals and inflation data for further direction.