TAIPEI, Taiwan — The Central Bank of the Republic of China (Taiwan) is facing increasing pressure to raise its key interest rates, as the inflationary pressure heightened in August, but it will not do so until December at the earliest, according to Australia and New Zealand Banking Group (ANZ).
Taiwan’s consumer price index (CPI) rose 2.07 percent annually in August to an 18-month high and registering an annual growth of over 2.0 percent for the first time since February 2013, when the inflation rate was distorted by the timing of the Chinese New Year holiday, the bank said in a research note Saturday.
The August rise largely reflected more expensive food products, which rose 5.6 percent. The prices of eggs rose 19.39 percent, meat 11.85 percent, vegetables 11.16 percent, fruits at 6.30 percent and fish at 5.66 percent, according to official figures.
“The risk of a policy rate hike has heightened. However, the local market shows no sign that the CBC is ready to lift the base rate in September’s meeting,” ANZ said.
With Taiwan scheduled to hold major elections Nov. 29, the country’s monetary policy will tend to be prudent until after the election, ANZ said. “We do need to monitor the development of the inflation rate in the last quarter and the risk of an earlier-than-expected rate hike in December,” it said.
The central bank left its benchmark discount rate unchanged for the 12th consecutive quarter at 1.875 percent after its most recent board meeting on June 26, as was widely expected.
The central bank will hold its next quarterly board meeting on Sept. 25.