- Bank sees risks ahead from US tariffs, geopolitics
- Taiwan-made chips have powered AI boom, boosted economy
- Central bank sees inflation rapidly cooling
TAIPEI, Sept 18 (Reuters) - Taiwan's central bank on Thursday raised its economic growth forecast for the year, hailing booming exports, but warned of risks ahead from U.S. tariffs and geopolitical developments as it held its policy interest rate steady, as expected.
Taiwan's role as a major producer of advanced semiconductors powering the AI boom for companies like Nvidia has fuelled its economy this year.
The central bank left the benchmark discount rate at 2% at a quarterly meeting, in a unanimous decision and in line with predictions from a Reuters poll where 30 of 32 economists forecast no change.
The central bank raised its 2025 estimate for economic growth to 4.55%, from a previous forecast of 3.05% given in June, but said it saw it slowing to 2.68% next year.
The central said in a statement that it would closely monitor developments in U.S. tariffs, as well as geopolitical risks.
Taiwan's economy grew 4.59% in 2024, buoyed by robust exports, including high demand for artificial intelligence applications.
Goods from Taiwan are subject to a 20% U.S. tariff, as part of President Donald Trump's sweeping measures targeting imports from across the globe, though Taipei remains in talks with Washington to get a better deal. Semiconductors are so far excluded from the tariffs.
The central bank trimmed its consumer price index forecast for this year to 1.75%, down from its June forecast of 1.81%. For next year it said it saw inflation slowing further to 1.66%.
Taiwan's rate decision came a day after the U.S. Federal Reserve, goaded by the risk of rising unemployment, reduced interest rates for the first time since December.
Reporting by Liang-sa Loh and Faith Hung; Editing by Ben Blanchard, Christian Schmollinger and Andrew Heavens
Source: Reuters