The governor of Taiwan’s central bank, Yang Chin-long said on Wednesday that even though the country’s economy would develop more slowly than expected this year, stagflation won’t set in, this comes ahead of the central bank’s next planned rate-setting meeting later this month.
The Taiwan central bank said that rate increases will stop in 2023 as inflation is under control during its most last quarterly conference in Dec, when it increased its policy interest rate (TWINTR=ECI) by 12.5 bps to 1.75%.
Yang reiterated his statement from Dec that inflation will return to below 2% in 2023 when he told MPs that the bank’s monetary policy was “applicable” during a session of parliament.
“According to latest estimates, inflation will decrease to about 2% with a 2% Gross domestic product. In general, this is okay “he stated.
Yet, against market forecasts for a 2.69% increase, Taiwan’s CPI for Jan increased by 3.04% year over year.
According to Yang, inflation will continue to be higher in the 1st quarter and begin to decline from the 2nd quarter.
“This year, the cost of other goods has plummeted & energy rapidly. The present estimate indicates that these prices will continue to decline, “he said.
After touching 0.41% in the 4th quarter, the economy is now slowing down significantly, forcing the central bank to decide on March 23 whether to hold steady or perhaps start reducing rates.
Rapid interest rate increases, according to Yang, are “not suitable” because of the significant effects.