The Central Bank of the Republic of China (Taiwan) left its main policy rate unchanged at 1.875 percent at its quarterly policy meeting today, in line with the consensus forecast. Officials also left rates on hold at their previous two meetings in September and June after a cumulative increase of 75 basis points at their previous five meetings.

Data released since the CBC's previous policy meeting mid-September have shown an increase in headline inflation, largely reflecting the impact of adverse weather events on food prices, but steady and subdued core inflation. GDP growth picked up in the three months to September, but PMI surveys have shown ongoing contraction in the manufacturing sector.

The CBC's statement shows officials expect external demand to strengthen in 2024, with domestic investment also forecast to grow at a faster pace but private consumption expected to grow only moderately. Officials forecast GDP growth will pick up from 1.40 percent in 2023 to 3.12 percent in 2024. Officials have revised their 2023 inflation forecasts lower and expect price pressures to moderate further in 2024, with headline inflation forecast to fall from 2.46 percent in 2023 to 1.89 percent in 2024 and core inflation forecast to fall from 2.61 percent to 1.83 percent.

Officials concluded today that keeping policy on hold was appropriate given their assessment that price pressures are likely to moderate and their uncertainty about the outlook for the global economy. The statement provides little guidance on the likelihood of additional policy tightening in coming months, merely noting that adjustments to policy settings will be made if considered warranted.

At its quarterly monetary policy meeting, Taiwan's central bank is expected to hold its policy interest rate at 1.875 percent amid easing inflation. The official announcement is expected before 1900 Taipei time, which is 4 a.m. EST (0900 GMT). In June, the bank maintained its policy rate for the first time in more than a year after raising it for the fifth straight time in March.

Taiwan’s central bank, the Central Bank of the Republic of China, announces its monetary policy with regard to interest rates four times a year. The announcement conveys to the financial markets and investors what, if any, changes in policy might be. The main focus is the target set for the discount rate.

The Central Bank of the Republic of China determines interest rate policy at four quarterly meetings during the year, with officials adjusting their main policy rate, the discount rate. A post-meeting statement is issued after each meeting, while the minutes of each meeting are published a few weeks later.

Monetary policy goals are to aid and abet solid economic growth along with rising living standards, and to keep inflation low, stable, and predictable. The level of interest rates affects the economy. Higher interest rates tend to slow economic activity; lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, few homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the financial markets, while lower interest rates are bullish.