The Taiwanese central bank has announced another interest rate hike after the US Federal Reserve raised its interest rate and issued a lukewarm economic outlook. The central bank will raise its main interest rate slightly to 1.75% , meaning Taiwan has seen interest rate hikes for four consecutive quarters in a row. The Fed announced that more rate hikes are coming in the near future, and that an economic recession is still possible with US inflation decreasing. This news from the Fed resulted in US stock prices falling for three days in a row, as well as weak trading on the Taiwan stock market.
Taiwan’s central bank stated that it hopes to reduce the marginal rate differences with the Fed in order to reduce the impact on stocks, foreign exchange markets, and capital flows. Taiwan’s central bank also released its latest economic forecast for 2023 with Taiwan’s economic growth to be below 3%.
Finance minister Su Jain-rong (蘇建榮) stated that Taiwan exports have declined since September, including double digit declines since last month. This is due to both the recent Chinese import bans on Taiwanese products, as well as the ongoing US-China trade war. Su stated that exports will likely remain down due to the trade war even if the import bans in China are lifted.
The Taiwan central bank stated that it will implement and extend certain tax cuts to stimulate the economy. These include the tax cut on imports, which will be extended into the first quarter of 2023. Additionally, income tax deductions and exemptions have also been increased and will be felt by those filing their income tax next year.