Taiwan’s central bank is expected to maintain key interest rates at its upcoming quarterly policymaking meeting on March 20, as economic uncertainties stemming from US President Donald Trump’s tariff threats continue to loom, economists said on Sunday.
Tariff Concerns Dominate Policy Outlook
According to Wu Meng-tao, director at the Taiwan Institute of Economic Research, Trump’s tariff policies are likely to be a key discussion point at the meeting. His administration has already imposed tariffs on China, Canada, and Mexico while threatening further reciprocal tariffs against other nations, raising concerns about a potential global trade war.
Adding to these concerns, Trump has accused Taiwan of “stealing” the US semiconductor industry, fueling speculation that Taiwanese chips could soon face tariffs. In response, the central bank is expected to adopt a wait-and-see approach, keeping its monetary policy flexible to navigate possible market volatility, Wu said.
Potential Tariff War and Economic Impact
Wu warned that reciprocal tariffs could be implemented as early as April, potentially triggering a global tariff war. Given this risk, he suggested that Taiwan’s central bank should focus on stability and preparedness rather than making immediate policy adjustments.
Inflation Concerns from Electricity Rate Hike
Meanwhile, Taiwan Power Co. is reportedly considering an electricity rate hike next month due to financial losses and budget cuts, which could put upward pressure on inflation.
However, Dachrahn Wu, director of the National Central University Research Center for Taiwan Economic Development, noted that while higher electricity prices could fuel inflation, a worsening trade environment could push global commodity prices lower, potentially offsetting inflationary pressures.
“In light of Trump’s tariff measures, the central bank may need to prioritize economic growth over inflation control,” he said, suggesting that monetary policy could shift toward supporting Taiwan’s economy in the face of external risks.
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