Taiwan’s central bank has kept its benchmark policy rate unchanged at 2.00%, signalling little urgency to begin an easing cycle as economic growth remains robust and inflation subdued, Capital Economics has said in a note. With the current backdrop, monetary settings appear likely to remain stable through 2026 and 2027.

The decision was fully anticipated by markets and taken unanimously by the monetary policy committee. Unlike several regional peers, the central bank faces limited pressure to cut borrowing costs. Recent national accounts data point to a sharp acceleration in activity, with year-on-year GDP growth reaching 8.2% in the third quarter, one of the strongest readings in decades.

Exports continue to underpin the expansion, rising more than 30% in real terms, while domestic demand has lagged, particularly household consumption. Growth momentum is expected to remain solid into next year, with forecasts well above prevailing market expectations. The central bank has also raised its own outlook for 2026, reflecting confidence in the external sector.

Despite the rapid pace of growth, inflationary pressures remain muted. Headline inflation stood at 1.2% in November, comfortably below the level typically viewed as consistent with price stability. Productivity gains are helping to absorb demand pressures, suggesting inflation is likely to remain contained over the medium term.

Currency dynamics have also become less of a constraint on policy. After strengthening earlier in the year, the Taiwan dollar has weakened in recent months, easing appreciation pressures. While a widening current account surplus may renew upward pressure on the currency in 2026, this is unlikely, on its own, to prompt a shift towards lower interest rates given the strength of economic activity.