Taiwan’s AI-driven economy has powered GDP higher while inflation has firmed, strengthening the policy case for a rate rise at the CBC meeting on 17 December. Q3 GDP grew 14.4% year on year versus a 12.0% consensus forecast, up from 12.9% in Q2, extending double-digit expansion to a fourth straight quarter, the longest run since 1986-87. On a seasonally adjusted basis, growth rose to 3.2% quarter on quarter from 1.4% previously. The benchmark discount rate has been held at 2.00% for ten consecutive meetings, though September minutes showed two board members backed a hike.
Inflation Data and Monetary Policy Outlook
Price data have added to tightening expectations: September headline inflation increased to 2.7% year on year and core inflation to 2.5%, with temporary food and seasonal effects cited alongside underlying pressure. A 12.5bp move in December is framed as plausible, even as policymakers may wait for firmer confirmation. Supportive fundamentals, including a large external surplus, have been countered by foreign portfolio outflows estimated at USD54.3bn between July and 21 October, keeping USD/TWD near this year’s highs around 32.60; the USD, oil prices and net foreign equity flows are flagged as key drivers.
