Taiwan Central Bank Holds Rates, Charts Own Tight Policy Path

Taiwan’s central bank does not treat Federal Reserve decisions as a template, setting policy around domestic inflation, growth and financial stability. The economy is increasingly K-shaped: AI and export industries are booming while traditional manufacturers and domestic demand lag. Governor Yang Chin-long has also highlighted the debt-service burden that higher rates would impose on first-time homebuyers and businesses. Instead of relying only on the policy rate, the bank has used open-market operations, reserve requirements and other quantitative tools to restrain liquidity, while keeping inflation as its primary policy gauge.

On Sept. 17, 2026, the Central Bank of the Republic of China (Taiwan) left its discount rate at 2%, the rate on accommodations with collateral at 2.375% and the rate on accommodations without collateral at 4.25%, marking a 10th straight quarterly hold even after the Fed raised rates by 25 basis points. The bank lifted its 2026 growth forecast to 11.48% and its CPI estimate to 2.03%. Yang said policy remained modestly restrictive and officials would reassess if inflation failed to ease below 2% in 2027.