Taiwan’s central bank expected to announce another small rate hike By Reuters

TAIPEI (Reuters) – Taiwan’s central bank is expected to raise its key rate again this week at the same moderate pace as before, economists polled by Reuters said, but as exports and inflation slow it could maintain that rate. stable rate next year to support the economy.

The central bank is expected to raise the benchmark discount rate by 12.5 basis points to 1.75% at its quarterly meeting on Thursday, according to the median forecast of 23 economists surveyed. At the last meeting in September, the bank also raised it by 12.5 basis points to 1.625%.

An economist interviewed expected the central bank to remain firm.

Looking ahead, the median forecast from respondents was for the central bank to keep the rate at 1.75% for all of 2023.

The central bank has repeatedly said it will tighten monetary policy this year, in line with its counterparts elsewhere, with inflation a key factor.

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

Taiwanese inflation, never as bad lately as in the United States and Europe, has been slowing since August.

Its consumer price index was 2.35% higher in November than a year earlier, 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 would likely opt for another rate hike.

“I suspect a halt to rate hikes will be something for next year,” Chen said.

Yang told lawmakers the central bank “hopes” to keep inflation below 2%.

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

Exports plunged at the fastest pace in nearly seven years last month, and the government made dire predictions about the near future.

While last year the economy grew by 6.45%, the fastest rate since it grew by 10.25% in 2010, it is expected to grow much slower this year, hit by lockdowns of COVID-19 in China, global inflation issues and the impact of war in China. Ukraine.

Last month, Taiwan’s statistics agency lowered its gross domestic product forecast for 2022 to 3.06% from 3.76% in August. He also downgraded the outlook for exports for the year and said they would contract in 2023.

Fitch Ratings forecast last week that growth in Taiwan would decline to 2.1% in 2023 from 3.2% this year, largely due to weaker external demand.

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

He will also give his updated forecast for next year’s economic growth, having predicted 2.9% in September.

(Poll compiled by Anant Chandak and Carol Lee; Reporting by Liang-sa Loh and Ben Blanchard; Editing by Bradley Perrett)