Taiwan’s central bank governor has a tough balancing act to pull off in his first interest rate decision since renewing his term in office.
Governor Yang Chin-long must grapple with inflation that remains uncomfortably high, an economy that’s contracting, a still hawkish Federal Reserve, and global financial markets in turmoil.
Most economists surveyed by Bloomberg expect he will lead the bank’s policy committee in keeping the benchmark rate unchanged at 1.75%. The remaining five see a 12.5 basis-point hike to 1.875%.
“External headwinds and the global tech cycle downturn will continue to drag Taiwan’s economy,” said Gary Ng, a senior economist at Natixis SA. “Even though inflation may be sticky in the short run, the central bank will need to consider keeping interest rate on hold as the real economy simply cannot stomach it.”
Over the five years of his first term, Yang had to contend with increasingly fierce competition between the world’s two largest economies — Taiwan’s biggest trading partners — volatility in the technology sector, and an unprecedented worldwide pandemic.