Investors and consumers are watching to see if Taiwan’s central bank will continue to raise interest rates at its meeting this Thursday. This comes amid concerns about growing inflation. The central bank has raised interest rates for three consecutive quarters.
Central bank governor Yang Chin-long (楊金龍) stated that the two main factors in the Board’s decision are the inflation rate and the slowdown in global economic growth. Yang further stated that the central bank would be willing to accept inflation rates of 2% or below.
Taiwanese consumers have most clearly felt the impact of inflation through rising food prices. This year, Taiwan has reported a 2.35% increase in the Consumer Price Index. There’s been a 4.12% rise in overall food prices. Among these are a 5.81% rise to the cost of eating out, an 8.24% increase in the price of flour, and a nearly 25% increase in the price of eggs. The government statistics office recently released its annual numbers for November.
During a meeting of the Legislative Yuan, legislators expressed concern to Governor Yang that the inflation numbers do not adequately reflect the anxiety felt by many Taiwanese people. In response, Yang stated that although the cost of food has indeed gone up, central bankers must look at the economy as a whole and do not base monetary policy only on the cost of eating out.
In addressing concerns about the global economy entering a state of “stagflation” in 2023, Governor Yang stated that Taiwan has been more successful in controlling prices than the US and Europe. Until now Taiwan has been focused on supply-side solutions to controlling inflation, Yang said, adding that efficient shipping and a balanced labor market will also help in preventing stagflation.