Taiwan's central bank kept its benchmark interest rates on hold for a 10th consecutive quarter on September 17, saying the move would help preserve economic stability at a time of global uncertainty, Focus Taiwan reported on September 17.

The decision puts Taipei at odds with major peers that are tightening policy again. The US Federal Reserve raised its benchmark rate by a quarter of a percentage point to about 3.9% on September 16 local time, its first increase since 2023, as it seeks to rein in stubborn inflation. The European Central Bank lifted its key rate last week, and Bank of Japan Governor Kazuo Ueda said earlier this month that policymakers would weigh a possible hike at coming meetings, the next of which falls on September 18.

Taiwan's discount rate stays at 2%, the highest in 15 years. The rate on collateralised accommodations remains at 2.375% and the rate on non-collateralised accommodations at 4.25%.

The bank said holding rates steady would support steady growth, citing global uncertainties and the possible effect of Middle East conflicts on domestic prices and output. It also said domestic inflation remained manageable this year and was expected to drop below 2% in 2027.

Growth forecasts were revised sharply higher. The central bank now expects gross domestic product to expand 11.48% this year, up from the 9.45% it projected in June. The economy grew 14.15% in the first half, beating expectations, and exports have surged since July on demand tied to emerging technologies, while private investment and household spending kept rising, the bank said.

The consumer price index forecast for this year was raised to 2.03% from 1.91%, with inflation seen easing to 1.83% next year. The bank attributed the revision to high international oil prices and persistent service-sector inflation, adding that cheaper oil should lower fuel and airfare costs next year as consumer demand stays moderate.

Two housing credit changes take effect on September 18. The borrowing limit for second-home buyers rises to 70% of the property price from 60%, and land buyers will no longer have to start construction within a fixed period. The bank said tighter rules over the past two years had curbed property lending, cooled speculation and strengthened banks' risk controls.