TAIPEI, Nov 2 (Reuters) – Taiwan’s central bank showed concern about higher inflation ahead and raised the possibility of more rate increases if inflation remains a worry, minutes from its last board meeting showed on Thursday.
The central bank, at its quarterly board meeting in September, unanimously decided to keep its policy rate (TWINTR=ECI) at 1.875%.
It also flagged continued tight monetary policy as it keeps a close eye on inflation, and trimmed its 2023 growth forecast for the export-reliant economy.
“If inflation shows any hint of becoming unanchored by the next board meeting, the bank should take a stronger approach to curb inflation,” said one board member, who was not identified in the minutes.
Another board member said in this quarter the bank might need to “actively deal with possible inflation”, without elaborating.
A third board member said the bank might “timely adjust rates when needed” due to uncertainties including inflation and economic growth.
High inflation could become a “new normality” in future, said another board member.
Taiwan’s economy grew faster than expected in the third quarter, helped by domestic consumption, though exports remained weak due to sluggish global demand for the island’s hi-tech products and the government expected full-year 2023 growth of 1.61%, the slowest in eight years .
Taiwan’s inflation has been much milder than that of economies in Europe and the United States.
The bank, at the September meeting, trimmed its headline consumer price index (CPI) forecast for this year to 2.22% from a prediction of 2.24%, but said it saw it falling to less than 2% next year.
The central bank holds its next quarterly rate-setting meeting on Dec. 14.
Reporting by Liang-sa Lo and Yimou Lee; editing by Robert Birsel
Our Standards: The Thomson Reuters Trust Principles.