Taiwan Interest Rate

Taiwan’s central bank left its key discount rate unchanged at 2% at its December 2025 meeting, in line with market expectations and extending a pause in policy since March 2024. Policymakers cited moderate inflation, with headline CPI forecast to rise 1.66% year on year and core CPI at 1.65%, both lower than in 2024 and expected to ease further to 1.63% in 2026. Economic growth has remained robust, with GDP expanding 7.18% year-on-year in the first three quarters, surpassing forecasts, and full-year growth expected at 7.31%, well above the September projection of 4.55%, supported by strong demand for emerging technologies such as AI, which has driven substantial export growth. The central bank noted ongoing global uncertainties, including potential US trade-policy shocks, slower growth in China, and geopolitical and climate risks, while Taiwanese goods remain subject to a 20% US tariff amid ongoing negotiations for a more favorable agreement.