Taiwanese Central Bank Stands Pat as AI Boom Drives Growth Forecasts

The Central Bank of the Republic of China (Taiwan) maintained secured and unsecured lending rates at 2.375% and 4.250%, respectively. Despite consumer inflation lingering above the 2% warning threshold for four months, officials credited the artificial intelligence boom for providing enough economic cushion to avoid immediate rate hikes. The bank raised its 2026 GDP growth forecast to 11.48% from 9.45% and nudged its inflation projection for this year to 2.03%.

This decision arrived as a surprise to many analysts, who were divided on whether the bank would pursue a hike. Officials noted that the current stance balances domestic financial stability against international uncertainties, including the potential for Middle East conflict to disrupt oil markets. While the Federal Reserve recently opted for a 25-basis-point increase, Taiwan’s leadership remains sanguine about cooling inflation by 2027. Jason Tuvey of Capital Economics expects the bank to hold rates steady in the near term, as the local economy continues to benefit from robust, AI-fueled demand.