DBS revises Taiwan’s policy rate outlook, predicting a 12.5bps increase in 3Q amid rising inflation and GDP growth upgrades.
DBS adjusts its Taiwan policy rate forecast, now expecting a 12.5bps hike in the third quarter, raising the discount rate to 2.125% from 2.00%. The revision follows upgrades to 2026 GDP and CPI forecasts, now at 9.4% and 1.9%, respectively.
The central bank is likely to hold rates steady in June, but pipeline inflation pressures and second-round effects from higher energy costs could drive tightening later in the year. Headline CPI is projected to exceed 2% from May and reach 2.5% by mid-year, with core inflation also rising.
DBS highlights risks of further inflation pass-through, potentially pushing core CPI toward 2.5% in the second half of 2024.